Greece protests at cutbacks
Greek public workers prepare to strike against government cutbacks.
European exchanges moved ahead Tuesday on improved prospects for European Union intervention to ease a crippling debt and deficit crisis in Greece.
Greece's European partners are under pressure to approve a financial aid mechanism for Athens and are to convene at a summit Thursday in Brussels.
The Greek fiscal debacle is expected to figure prominently at the talks, with the EU wanting to avoid the intervention of the International Monetary Fund.
"We don't need to call in the IMF," EU Economic Affairs Commissioner Joaquin Almunia told the European parliament in Strasbourg. "We are all members of the IMF of course, but we can and should do this by ourselves.
"If we have appropriate levels of coordination, if we've got political commitment, if we use the instruments that we have available ... we do have more than enough instruments to do what's needed," he said.
But Almunia also voiced fears that Greece's struggle to rein in spending and shore up its sagging credibility on international financial markets could pose a "serious risk of spillover" into other parts of the 16-nation eurozone.
Greece's woes are a "matter of common concern for the eurozone and the EU as a whole," he added, stressing that the turmoil in the country's public finances "threatens stability" both at home and elsewhere in the eurozone.
The fear is that other debt-saddled eurozone members, notably Spain and Portugal, could - like Greece - find it increasingly more expensive to raise money on the international markets.
But the prospect of EU action, perhaps through bilateral loans to Greece, bolstered investor spirits Tuesday, analysts said.
Most European stock exchanges overcame earlier losses and closed in positive territory, with the London FTSE 100 index adding 0.38 per cent to finish at 5,111.84 points.
In Paris, the CAC 40 rose 0.15 per cent to 3,612.76 while in Frankfurt the DAX gained 0.24 per cent at 5,498.26 points.
Share prices edged up 0.18 per cent in Amsterdam and 0.68 per cent in Madrid while falling 0.57 per cent in Milan and 0.51 per cent on the Swiss Market Index.
Relief was palpable in Athens, where the stock market soared 4.96 per cent on Tuesday.
"For once the market is paying attention to what is happening in Europe," said Alice Lhabouz of Turgot Asset Management in Paris.
She said investors placed high hopes on the summit Thursday, awaiting a clear and forceful response that would ease fears of a Greek debt default.
Investors in the United States were likewise in better spirits Tuesday ahead of the EU summit, notably on news that the head of the European Central Bank, Jean-Claude, would leave a central bankers' meeting in Sydney to attend the Brussels summit.
The decision reinforced speculation that some sort of financial arrangement for Greece was brewing.
The blue-chip Dow Jones Industrial Average was up 0.90 per cent by midday at 9,997.80 points while the tech-heavy Nasdaq had risen 0.89 per cent to 2,145.03.
Earlier in Asia, the Tokyo Stock Exchange's benchmark Nikkei-225 index closed down 0.19 per cent to 9,932.90 points, its lowest level since the beginning of December.
Troubled Japanese car giant Toyota rose 2.89 per cent to 3,375 yen on bargain hunting after suffering sharp losses over safety problems and despite a report that it would suspend domestic production of its SAI and Lexus HS250h hybrids at the end of the week.
AFP
