European markets make first gains in days following Greek default
Equities investors across Europe threw caution to the wind today, as markets made their first tentative gains in days following the standoff over Greek debt.
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The FTSE 100 was up 0.5 per cent in early trading this morning, while Germany's Dax rose 0.6 per cent and France's Cac jumped 0.8 per cent.
The news came as Eurogroup leaders prepared to discuss a third bailout proposal from Greece, after the country failed to stump up the €1.6bn (£1.1bn) it owed the International Monetary Fund (IMF) last night. That put the country in arrears to the IMF. It has 30 days to pay before it goes into default.
Under Greece's latest proposal, it will borrow enough to cover its finances for two years from the European Stability Mechanism – Europe's bailout fund – at the same time as restructuring its debts. Crucially for Greece, the IMF – which is said to have been the toughest negotiator in recent talks – will not be involved.
But although markets showed optimism over today's talks, foreign exchange traders were less positive. The euro sank 0.4 per cent against the dollar, to $1.1102, and by the same amount against the pound, to £0.70700.
"France’s finance minister Michel Sapin has been the most vocal about the chances of this proposal being successful, noting that the impending referendum (which is more and more looking like a backfiring bartering tool for Greece) potentially complicates matters beyond repair," said Connor Campbell, financial analyst at Spreadex.
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"Originally tabled for this morning, this Eurogroup get together has been pushed back to this afternoon, assumedly to give the finance ministers more time to come up with create ways to tell Greece no."
Societe Generale's Kit Juckes added: "The impression I get is still that the consensus view expects Greece to reach a deal with creditors and remain in the euro, either before Sunday or after a ‘yes' vote. This may be right but seems complacent to me.
"The only thing we can be sure of is that there are many more twists and turns in this crisis and plenty of uncertainty ahead. For now, we'll follow news headlines and possibly go on drifting back towards EUR/USD 1.10."