LONDON – Eurozone stocks posted moderate gains yesterday after creditors offered Greece an extension to its bailout with an additional 12 billion euros ($13.4 billion) to keep it from defaulting, AFP reports. The CAC 40 in Paris climbed 0.35 percent to 5,059.17 points and Frankfurt’s DAX 30 added 0.17 percent to 11,492.43 points. Milan rose 0.67 percent and Madrid gained 0.57 percent.
Meanwhile Athens’ main index posted a strong 2.03 percent gain to 797.52 points. But outside the eurozone, London’s benchmark FTSE 100 index dropped 0.79 percent to 6,753.70 points. “After a poor start, European markets gained on Friday despite no resolution to the crisis in Greece with positive rhetoric from officials … helping to abate concerns,” said market analyst Jasper Lawler at CMC Markets UK.
Greece’s international creditors on Friday offered Athens a five-month, 12-billion-euro extension of its bailout programme but said it must seal a deal this weekend to avoid an IMF default next week. Angela Merkel and Francois Hollande discussed financing plans with leftist Greek Prime Minister Alexis Tsipras on the eve of a “decisive” meeting of eurozone finance ministers aimed at finding a deal to end the crisis.
The plan would include an immediate disbursement of 1.8 billion euros to help Greece meet a payment of 1.5 billion euros due to the IMF on Tuesday. Without help, Greece will likely default on that payment, setting off a process that could end with a messy exit from the eurozone and even the EU. Tsipras did not directly reject the offer but said: “Europe’s principles are not based on blackmail and ultimatums.”
In foreign exchange, the euro slid to $1.1148 from $1.1206 late in New York on Thursday. Away from Greece, Britain’s biggest retailer, supermarket group Tesco, shot to the top of London’s FTSE after it reported improving numbers following a record annual loss. “Although Tesco has seen (quarterly) sales drop by 1.3 percent this is better than expected and an improvement on last year’s fall of 4.0 percent,” noted Alastair McCaig, market analyst at IG trading group.
Tesco, whose shares rallied 2.71 percent to 223.65 pence in Friday trading, is seeking to overhaul its business after reporting the biggest annual loss in its almost 100-year history of £5.74 billion ($9.03 billion, 8.06 billion euros) in the year through February. Britain’s largest retailer is also facing a fraud probe after a huge accounting scandal that saw it overstate profits by £263 million due to errors stretching back to before 2013.
Meanwhile in Paris on Friday, shares in Air France-KLM edged up 0.03 percent to 6.48 euros after its Air France unit denied a report that it was preparing to lay off 3,300 employees as part of continuing cost cutting at the French flag carrier. An email sent by the company said Air France “formally denies information published in the press” Friday, when the Le Monde daily reported the airline was preparing “3,000 ground crew departures and 300 among pilots”.
– Shanghai stocks slump –
Asian markets sank again Friday as the Greek talks dragged out, while Shanghai collapsed on fears Chinese stocks are overvalued after a year-long advance. Shanghai plunged 8.5 percent at one point, its biggest loss in eight years, as investors that had flooded the market on margin trading — borrowing cash to buy stocks — ran for the door. Chinese equities, which more than doubled in value in the year to June 12, eventually closed down 7.40 percent, or 334.91 points, at 4,192.87, its lowest point since the start of May.
The benchmark index has fallen almost a fifth in two weeks, having soared more than 140 percent in the previous 12 months. Hong Kong lost 1.78 percent, Sydney shed 1.54 percent, and Tokyo slid 0.31 percent. Meanwhile Seoul added 0.25 on hopes that a new $14 billion stimulus package would help boost the sagging economy, which has been hit by the deadly MERS outbreak.
The Dow Jones Industrial Average gained 56.66 points (0.32 percent) to 17,947.02. The broad-based S&P 500 slipped 0.70 (0.03 percent) to 2,101.61, while the tech-rich Nasdaq Composite Index fell 31.68 (0.62 percent) to 5,080.51.