Global markets greet Greek deal with measure of relief
U.S. crude for February delivery rose 18 cents at $94.55 in midday trading on the New York Mercantile Exchange. The February contract expires later Tuesday and most trading has moved to the March contract, which was up 21 cents at $94.80.
Pan Pylas, The Associated Press
Published Tuesday, November 27, 2012 6:55AM EST
Last Updated Tuesday, November 27, 2012 1:16PM EST
LONDON -- A deal to give Greece more cash was greeted with measured relief Tuesday, though concerns remained over the country's ability to implement its required reforms as the economy shrinks.
In the early hours of Tuesday, Greece's euro partners and the International Monetary Fund agreed to release vital loan payments totaling some (EURO)44 billion ($57 billion) and introduce a series of measures designed to reduce the country's massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a still-vague bond buyback program.
Though the deal avoids an imminent bankruptcy of Greece, the country still has to implement wide-ranging cuts and reforms in the months and years ahead. Many in the markets think that will be too much for a country that's about to enter its sixth year of recession and a society struggling to cope with rising poverty levels and an unemployment rate of 25 per cent.
"Clearly Greece undoubtedly has the capacity to throw further bad news over the coming months and years although for now such risks should be laid low meaning that the eurozone crisis should remain off the boil into year end," said Jane Foley, an analyst at Rabobank International.
In Europe, the FTSE 100 index of leading British shares rose 0.2 per cent to close at 5,799.71 while Germany's DAX rose 0.6 per cent to 7,332.33. The CAC-40 in France ended flat at 3,502.13.
The rally in Athens was minimal, with the main index up only 0.3 per cent as investors had hoped for a little more debt relief from the deal.
The euro also gave up some earlier gains to trade 0.2 per cent lower at $1.2945.
In the U.S., stocks were underperforming as investors fretted again over the prospects of a budget deal between the White House and lawmakers to avoid the so-called "fiscal cliff" of automatic tax increases and spending cuts at the start of next year. Those concerns more than offset a rise in a closely-watched measure of consumer confidence -- the Conference Board's main index rose to 73.7, its highest level since Feb. 2008.
"Investors are still very aware of the impending fiscal cliff at the end of the year," said Craig Erlam, market analyst at Alpari. "Until we see progress here, risk appetite is likely to remain low in the U.S."
The Dow Jones industrial average was down 0.2 per cent at 12,948.48 while the broader S&P 500 index was flat at 1,406.47.
Earlier, most Asian markets posted gains. Japan's Nikkei 225 index rose 0.4 per cent to close at a seven-month high of 9,423.30 while South Korea's Kospi rose 0.9 per cent to 1,925.20
Hong Kong's Hang Seng lost 0.1 per cent to 21,844.03. In mainland China, the Shanghai Composite Index fell 1.3 per cent 1,991.16, its lowest close in nearly four years. On Jan. 23, 2009, the index closed at 1,990.66. The smaller Shenzhen Composite Index plummeted 3 per cent to 765.52.
Oil prices were lacklustre, with the benchmark contract down 16 cents at $87.58 barrel in New York.