Euro stocks rise as Greek bailout nears
Markets have risen on hopes that Greece will finally secure a massive but long-delayed international bailout, allowing the debt-crippled country to avoid defaulting on its debts next month.
A surprise easing in monetary policy in China over the weekend also added to the buoyant mood in markets on Monday - many stock indexes are trading at multi-month highs, while the euro has recovered its poise.
The main focus of attention - on a day when Wall Street is shut for a public holiday - will be Brussels, where the finance ministers from the 17 euro zone countries are gathering to discuss the elusive Greek bailout deal.
After some euro zone countries suggested last week that they might prefer Greece to default, the latest comments indicate the ministers will approve the 130-billion-euro ($A160 billion) bailout.
Greece has struggled to convince its partners in the euro zone, particularly Germany, that it will enact the austerity and reform measures in return for the cash.
As the finance ministers arrived for the meeting, which may last until well into the night, they appeared ready to back the deal.
"I am of the opinion that today we have to deliver, because we don't have any more time," Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of euro zone finance ministers, said as he arrived in Brussels.
Alongside the bailout, Greece is expected to conclude debt-reduction discussions with its private creditors. That should slice off about 100 billion euros from Greece's debt mountain. Even after that, Greece will have the highest debt burden of all the euro countries.
One of the last-minute hurdles to overcome is how to get Greece's debt burden down to around 120 per cent of GDP by 2020. One way that target could be met is if European central banks forgo profits due on their holdings of Greek debt.
Even though there are issues that need to be ironed out, investors are confident of a successful conclusion.
"Although we can all be allowed a degree of scepticism regarding an imminent solution to the Greek bailout, investors still seem happy to look for excuses to buy, and stock markets still seem to have plenty of momentum, even considering how far they have come in recent months," said David Jones, chief market strategist at IG Index.
In Europe, the FTSE 100 index of leading British shares closed 0.7 per cent higher at 5,945.25 while Germany's DAX rose 1.5 per cent to 6,948.25. The CAC-40 in France rose 1.0 per cent to 3,472.54.
The euro was 0.4 per cent higher at $US1.3257.
Sentiment was also boosted by the surprise decision over the weekend by China's central bank to lower the ratio of funds that banks must hold as reserves to 20.5 per cent from 21 per cent, effective Friday. That will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter's 8.9 per cent to closer to 8 per cent. The cut is the second in two months.
"The loosening of monetary policy reflects official concern over the prospects for economic growth, where a variety of indicators such as exports, industrial production and retail sales are all reflecting a slower pace of growth," said Neil MacKinnon, global macro strategist at VTB Capital.
Earlier in Asia, Japan's Nikkei 225 index added 1.1 per cent to close at 9,485.09, its highest closing level of the year. South Korea's Kospi rose slightly to 2,024.90. Mainland China's benchmark Shanghai Composite Index climbed 0.3 per cent to 2,363.60 after gaining more than 1 per cent earlier in the day, while the Shenzhen Composite Index gained 0.3 per cent to 923.32.
Hong Kong's Hang Seng dipped 0.3 per cent to 21,424.79.