Greek hopes unleash demand for shares, euro

Thu Mar 8, 2012 7:39am EST
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By Richard Hubbard

LONDON (Reuters) - The euro and share markets staged big gains on Thursday as investors took heart from signs that Greece would complete a much needed private debt swap to avoid a chaotic default and that the U.S. economy would deliver more upbeat news.

Wall Street was also set to open higher .N ahead of weekly jobless claims data that are expected to confirm the strength of the domestic labor market.

But investors are likely to remain cautious ahead of a formal announcement on the Greek deal, as well as Friday's keenly-watched U.S. jobs report, while central banks are being closely monitored for signs they will keep promoting growth.

"This (Greece) has been the game of anticipation. I think it's likely to remain volatile but overall ... we would be expecting more upside potential moving into next week," Luca Solca, global head of European research at CA Cheuvreux, said.

The MSCI world equity index .MIWD00000PUS gained 0.8 percent to 326.61 after markets rose across Asia on the optimism over a Greek deal, while better economic data lifted U.S. markets on Wednesday.

The broad FTSE Eurofirst 300 .FTEU3 index of top European companies rose 1.3 percent to 1,072.31 with the banking sector , which is most directly linked to Greece's debt worries through its sovereign debt holdings, adding over 2 percent.

Equity markets are recovering swiftly from a sharp downturn on Tuesday, when the MSCI world index saw its biggest one-day fall of the year, as the easier liquidity provided by the world's major central banks is put to work.

On Thursday the growing view that the Greek deal would get done [ID:nL5E8E847D] lifted assets from copper and gold to oil, along with commodity-linked currencies such as the Australian dollar, while the U.S. dollar took a back seat, although it rose against the Japanese yen.   Continued...