Euro, shares gain on Greek deal hopes

Thu Feb 9, 2012 4:57am EST
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By Richard Hubbard

LONDON (Reuters) - European stock markets and the euro extended two months of gains on Thursday as Greece edged closer to a bailout deal and investors bet a brace of central bank meetings would offer further support for the move into riskier assets.

Disagreement among Greek politicians over pension reform is the last hurdle to securing a second bailout for Greece and avoiding a chaotic debt default in March. Hopes are high a way will be found around the issue at a euro zone finance ministers meeting later in the day.

The single currency, which briefly hit a fresh two-month high of $1.3313 in late Tokyo trade on expectations the Greek deal would get done, was up around 0.3 percent at $1.3298.

"Short-term optimism played out and the euro went above $1.33 on the view that there would be a deal sooner rather than later," said Jeremy Stretch, currency strategist at CIBC.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares was initially held back by disappointing results from Dutch bank and insurance group ING ING.AS and Credit Suisse CSGN.VX, but soon resumed its rise back to six-month highs, gaining 0.4 percent higher at 1075.70.

Markets have been in optimistic form since the European Central Bank flooded banks with almost half a trillion in cheap loans in late December, with the opening of a new year which allows investors to relaunch bets adding to the trend.

However, a jump in Spanish bond yields, after the government

surprised markets by selling an extra 4 billion euros of 10-year on Wednesday, rattled bond markets and highlighted the fragility of the sentiment behind the rally.   Continued...

<p>People walk past an electronic board displaying graphs of various market indices from around the world outside a brokerage in Tokyo November 1, 2011. REUTERS/Yuriko Nakao</p>