By Sara Sjolin, MarketWatch
FTSE 100 climbs to highest since 1999
LONDON (MarketWatch) -- European stock markets moved firmly
higher on Wednesday, boosted by reports that Greece will ask for an
extension to its loan agreement later in the day.
The Stoxx Europe 600 index picked up 0.9% to 380.30, after a
volatile day on Tuesday, when it eked out a 0.1% gain. Greece's
Athex Composite index added 1.5% to 851.41, reversing after a 2.5%
slide on Tuesday. Greek banks rallied, with shares of Piraeus Bank
SA up 8.7%, Eurobank Ergasias SA rising 7.5% and National Bank of
Greece SA 7.6% higher.
Greek progress: Sentiment in Europe was lifted by hopes that
Greece and its international creditors were getting closer to a
debt agreement that will keep the country financially afloat when
the current bailout program expires on Feb. 28.
According to an official with knowledge of the situation, the
Greek government will ask for an up to six-month extension to its
loan agreement, but not request a continuation of the full bailout
program. Greece has resisted the terms of the current rescue
program, arguing that the conditions are hurting the country's
economy and society.
The terms of the proposed deal are reportedly still under
negotiation. But Germany has already indicated that it won't accept
a loan agreement without a formal extension of the bailout program,
including the strict austerity conditions attached.
If Greece doesn't get some sort of loan or program extension
before the end of the month, the country risks running out of money
and defaulting on its debt. A meeting of eurozone finance ministers
-- the Eurogroup -- broke down abruptly on Monday.
"The Greek government is proposing to reverse reforms, which is
completely unacceptable for parliaments in Berlin, Den Haag or
Amsterdam. We are still far away from a deal, and the risk of
'Grexit' remains elevated, at 35%," said Christian Schulz, senior
economist at Berenberg, in emailed comments on Wednesday.
Concerns have risen that Greece may withdraw from the eurozone
-- a "Grexit" -- if the country's new antiausterity government is
unable to come to an agreement with its international lenders.
The European Central Bank will on Wednesday review the emergency
liquidity assistance granted to Greek banks, and economists largely
expect the funding line to remain open.
Other European markets: The U.K.'s FTSE 100 index added 0.1% to
6,903.56, on track for its highest close since 1999. The benchmark
had traded as high as 6,921.32 earlier in the day, but the gains
were dented by hawkish minutes from the Bank of England's February
meeting as well as solid labor-market data. A drop in the
unemployment rate and rise in salaries will provide the BOE with
more ammunition to eventually raise interest rates, which isn't
well-received by stock investors.
The pound (GBPUSD), on the other hand, rose to $1.5428, up from
$1.5354 late Tuesday.
France's CAC 40 index climbed 1% to 4,801.51, while Germany's
DAX 30 index gained 0.6% to 10,960.70.
Movers: Shares of Peugeot SA rose 4.7% after the French car
maker said it narrowed its loss in 2014, boosted by strong sales in
China and cost cutting.
Credit Agricole SA jumped 6.9% after reporting
better-than-expected fourth-quarter earnings. The French bank also
said it would name its new CEO next week.
Accor SA gained 3.7% after the hotel group said profit rose 77%
last year.
Carlsberg AS (CABJY) fell 2.2% after the Danish brewer reported
a sharp drop in profit in the fourth quarter.
Swedish Match AB fell to the bottom of the Stoxx 600, down 3.4%
after the tobacco company reported full-year earnings.
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