Hopes of a solution for Greece’s debt crisis meant Europe’s stock markets mostly finished higher. Athens’ main share index gained nearly four percent with the country’s biggest lender, National Bank of Greece, up 9.5 percent.
But investors said they have heard soothing words from politicians before and economist Vagelis Agapitos in Athens cautioned that we are not out of the woods yet: “I think the markets are already discounting a pretty dire result of the financial Greek crisis. Now we have a breather.I personally believe that markets will wait until a final solution is there and they will only start getting nervous if that solution falls short of expectations.”
In Frankfurt, Oliver Roth of Close Brothers Seydler Bank, said: “The markets demand a solution for the Greek problem, a sustainable solution. It’s not just about throwing money into Greece in order to service interest payments. What is needed is a Marshall plan to help restructure the country, so it can, in the foreseeable future, stand on its own feet again and is not dependent on EU money anymore.”
Shares held their gains even after the International Monetary Fund cut its forecast for US economic growth and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits.
The euro rose against the dollar. But the traditional safe havens of gold and the Swiss franc remained firm, an indication that investors are still nervous.