Greece Plan to Buoys European Markets

European stocks rose Wednesday, boosted by a fresh set of austerity measures from Greece and better-than-expected U.S. private sector employment data. The Euro gained against the dollar while oil and gold prices edged higher.
Greece took center stage, announcing another round of austerity measures aimed at reducing its budget deficit. A combination of tax increases and spending cuts will reduce the budget about €4.8 billion ($6.53 billion), or roughly about 2% of Greece's gross domestic product. The program involves new taxes on a wide range of items, including tobacco and luxury cars, as well as reductions in civil-service pay.
European leaders praised the plan and ratings agencies said the government's actions indicate that Athens is serious about getting its fiscal situation under control. Financial markets responded positively, with the cost to insure against a Greek debt default declining. The Greek stock market began the day strong but ended down 0.4%. Even so, the benchmark ASE is still up 5.3% this week.
Greece is expected to soon test the market with a €3 billion to €5 billion bond issue. In addition, the Greek government said on Wednesday that it expected the European Union to demonstrate its "solidarity" with Greece. Thus far, the EU has resisted offering more than rhetorical support. German officials said no financial aid would be offered when German Chancellor Angela Merkel meets with Greece Prime Minister George Papandreou in Berlin Friday.
As the drama in Greece unfolded, European equity markets rose. The Stoxx Europe 600 ended up 0.8% at 252.60, U.K.'s FTSE 100 closed up 0.9% at 5533.21, Germany's DAX increased 0.7% at 5817.88 and France's CAC-40 gained 0.8% to 3842.52. Asian shares ended mostly higher while U.S. stocks rose in midday trading.
The main European equity markets received a boost from the release of U.S. ADP employment data, following a rather lackluster start to the day's trading. Private-sector firms in the U.S. shed 20,000 jobs in February, the best reading since 22,000 jobs were added in January 2008. The ADP data are seen as a precursor to the closely-watched nonfarm payrolls, which are due out this Friday.
At 1650 GMT, the Euro was up 0.9% at $1.3731. Sterling broke its one week losing streak, helped by strong data from the U.K.’s service sector. The pound was at $1.5108, up 1.0%.
Meanwhile, oil futures for April delivery rose 1.5% to $80.87 on the New York Mercantile Exchange. Gold futures climbed 0.4% to $1142.
Crude-oil prices edged higher as U.S. oil inventories data showed demand improving. At 1650 GMT, light, sweet crude for April delivery was up 1.5% at $80.87. And gold for April delivery on the Comex division of the New York Mercantile Exchange rose 0.4% to $1142.60.
In major market action: Shares of Xtrata rose 3.8% and Antofagasta climbed 3.7% as a broadly weaker dollar boosted metals futures.
German sports apparel maker Adidas declined 4.1% after its fourth-quarter profit decreased 64%, missing analyst forecasts.
Adecco shares were up 4% after the Zurich provider of human-resources services swung to a fourth-quarter profit of €42 million, compared with a loss of €22 million last year.
After what Chief Executive Patrick De Maeseneire called an "exceptionally tough" 2009, the company said that the "positive development of the revenue trend observed during the fourth quarter ... continued into the new year."
Emerging markets-focused bank Standard Chartered shares rose 5.3% after the lender also said it has started the year well. The bank made the comments as it reported a 4.7% rise in its 2009 net profit to $3.28 billion as it continued to increase its market share.
NicOx shares jumped 5.9%. The French drug developer licensed the world-wide rights to NCX 116, a treatment for glaucoma and ocular hypertension, to Bausch & Lomb. Bausch & Lomb will pay NicOx $10 million upfront plus milestone payments of as much as $169.5 million. NicOx is also eligible for tiered double-digit royalties on sales.
POST by Bijay Thapa. bijay-lifeinsurance.blogspot.com