European markets edge up despite Greek debt fears
European stock markets won some respite Monday ahead of a meeting of eurozone finance ministers in Brussels, where the Greek debt crisis will likely top the agenda. However, public holidays in many Asian countries as well as the US have reined in some of the volatility that gripped markets over the last couple of weeks.
The FTSE 100 index of leading British shares was up 34.48 points, or 0.7 per cent, at 5,176.93 while Germany's DAX rose 34.26 points, or 0.6 per cent, at 5,534.65. The CAC-40 in France was 26.54 points, or 0.7 per cent, higher at 3,625.61.
The main point of interest for Europe's markets will continue to be the debt problems afflicting Greece, as finance ministers from the 16 euro countries gather in the wake of last Thursday's meeting of EU leaders. On Tuesday, the finance ministers of the full 27-nation European Union meet.
Though EU leaders gave Greece some vocal support, no money or guarantee was offered, primarily because Germany was not willing to stump up any cash as it could undermine German bonds and put further pressure on the euro.
Instead, all agreed that Greece's progress in bringing down its budget deficit will be closely monitored and it would not be allowed to threaten the eurozone. Markets interpreted the latter comment as an implicit guarantee that eurozone policymakers will help the country if its own efforts fail.
An ensuing narrowing in spreads between German and Greek bonds - a sign that the markets think a Greek default is becoming less likely - and a more steady tone to the euro have diminished expectations that anything substantially new will emerge later.
"Risk aversion remains in vogue, though the resilience of equity markets suggests we are seeing nervousness more than outright fear and I sense the dollar's rally may, therefore, be losing momentum," said Kit Juckes, chief economist.