Germany’s DAX index was up by 1.3% to 11,462 by mid-morning, France’s CAC 40 was up 1.8% to 4992, Spain’s IBEX 35 index rose 1.54% to 11,206 and Italy’s FTSE MIB was up 1.14% to 23,200.
Gains for the FTSE 100 were slightly less pronounced, with the UK’s leading index up 0.6% to 6715.
The news will be warmly welcomed by investors who piled into European equities funds during the early part of this year only to see Greece pull the rug from under the positive sentiment which had developed.
Not everyone is convinced the latest deal solves the problem, even if it is confirmed to be as described in media reports, and is signed off by all necessary parties.
Miton’s multi-asset manager David Jane remains sceptical on whether a new bailout will provide any more than short term respite. “A great deal has recently been written about the Greek debt crisis and its failure to come to an agreement with its creditors,” he said. “The narrative centres on Greece’s failure to institute reforms of its tax and benefit system and the problems created by the single currency. This causes issues as there is an inability to devalue and an unwillingness to facilitate fiscal transfers.”
“What is discussed less are the real long term causes and yet this is arguably where the more important lessons lie,” Jane added. “It has been argued that Greece is different from other European nations because of a cultural inability to gather taxes and an excessive and wasteful level of government spending.”
