By PAN PYLAS, Associated Press
LONDON (AP) — Markets remained hopeful Wednesday that a long-awaited deal to allow Greece to claim its second bailout was near despite another delay to discussions between the country's political leaders.
Stocks were generally firmer, while the euro was trading near two-month highs, as investors awaited the latest developments in Athens. Though a host of deadlines have passed without agreement, the prevailing view in the markets is that a deal for Greece to get its hands on euro130 billion ($170 billion) will be secured.
"Optimism that a deal will be reached has risen in recent days, though clearly that optimism remains vulnerable to unexpected developments," said Nick Bennenbroek, an analyst at Wells Fargo Bank.
In Europe, the FTSE 100 index of leading British shares was unchanged at 5,890 while Germany's DAX rose 0.5 percent to 6,785. The CAC-40 in France was 0.4 percent higher at 3,424.
The euro was also fairly subdued, trading flat at $1.3253, having earlier hit a two-month high of $1.3289.
In the U.S., the Dow Jones industrial average was up 0.1 percent at 12,885 while the broader Standard & Poor's 500 index rose 0.2 percent to 1,350.
The focus in the markets remains centered on Athens as Greek coalition leaders study a draft deal on further austerity measures demanded to secure a new bailout that will determine whether the country avoids bankruptcy next month.
The heads of the three parties backing the interim government led by Prime Minister Lucas Papademos received the 50-page document, drafted with the country's debt inspectors, earlier in the day. A meeting of Papademos with the party leaders, originally scheduled for 1100 GMT, had finally started at 1500 GMT.
Without the bailout, Greece would not have enough money to pay off a big bond redemption next month, triggering a default that could send shockwaves around financial markets and the global economy.
Greece has been kept solvent for the last two years by euro110 billion ($145 billion) in international rescue loans. But the money was not enough and a second loan is urgently needed to avert bankruptcy.
"We are finally approaching the endgame of the Greek talks," said Gary Jenkins, managing director at Swordfish Research. "Ultimately it is difficult to see how they can do anything other than agree a deal. After all, the alternative is a disorderly default which could lead to a much deeper economic depression and potential civil unrest."
Jenkins said a report in the Wall Street Journal that the ECB is prepared to contribute to lightening Greece's debt burden will help pave the way to an agreement. According to the report, the ECB would essentially give up on profits that it stands to gain on its Greek bond holdings by handing them over to the European bailout fund, which then will sell them back to Greece — Athens would gain billions in the deal.
Corporate earnings reports were mixed, with disappointing results from French pharmaceuticals company Sanofi, Danish wind turbine maker Vestas — their shares fell 0.8 percent and 13 percent respectively.
Figures from Norwegian oil company Statoil were more upbeat, and its shares rose 2.4 percent.
Earlier in the day, Asian stocks posted sharp gains following a retreat of the yen that was welcomed by Japan's mighty export sector. The Nikkei 225 index in Tokyo gained 1.1 percent to close at 9,015.59, its highest finish since Oct. 28.
Hong Kong's Hang Seng surged 1.5 percent to 21,018.46 while mainland China's Shanghai Composite Index jumped 2.4 percent to 2,347.53 and the smaller Shenzhen Composite Index gained 2.8 percent to 893.82.
Oil prices headed back toward $100 a barrel Wednesday after an unexpected drop in U.S. crude supplies suggested demand is improving — benchmark crude for March delivery was up $1.26 at $99.67 a barrel in electronic trading on the New York Mercantile Exchange.