New Greece Deal Reached, Banks Push FTSE 100 Higher
Eurozone leaders at a marathon emergency summit on Greece have reached an agreement.
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Euro zone leaders clinched a deal with Greece on Monday to negotiate a third bailout to keep the near-bankrupt country in the eurozone after a whole night of haggling at an emergency summit.
“Euro summit has unanimously reached agreement. All ready to go for ESM programme for Greece with serious reforms and financial support,” European Council President Donald Tusk announced on Twitter, referring to the European Stability Mechanism bailout fund.
“Agreement,” said Belgian Prime Minister Charles Michel in a one-word tweet.
The Greek Prime Minister Alexis Tsipras said the deal could bring new investment to help the country pull itself out of recession and avoid the collapse of its banking system.
The deal is difficult but we averted the pursuit to move state assets abroad. We averted the plan for a financial strangulation and for the collapse of the banking system.
In this tough battle, we managed to win a debt restructuring,
– Alexis Tsipras, Prime Minister, Greece
However the tough conditions imposed by international lenders led by Germany, could bring down Prime Minister Alexis Tsipras’ leftist government and cause an outcry in Greece. Even before the final terms were known, his labour minister went on state television to denounce the terms.
EU officials said Tsipras finally accepted a compromise on German-led demands for the sequestration of Greek state assets to be sold off to pay down debt. The terms of the agreement were not immediately known.
The Greek leader also dropped resistance to a full role for the International Monetary Fund in a proposed 86 billion euro ($95.78 billion) bailout, which German Chancellor Angela Merkel has declared essential to win parliamentary backing in Berlin.
Britain’s top equity index hit a two-week high on Monday, with banks among the best performers, after the bailout deal.
The blue-chip FTSE 100 index was up 0.8 percent at 6,724.71 points by 1135 GMT, with advances in banks - highly geared to market declines - adding the most points to the index.
For Greece, the 86bn package will allow it to meet its financial commitments for the next three years. But the conditions are extremely tough.
— Christophe Donay, Pictet Wealth Management chief strategist, in a note to Reuters
Among standout gainers, British Airways’ owner International Consolidated Airlines Group (IAG) rose 1.9 percent after UBS upgraded the stock to “buy” from “neutral”.
Among mid caps, specialty chemical maker Alent soared 45 percent to a record high after a bid from U.S. peer Platform Specialty, pushing the FTSE 350 Chemicals Index 2.6 percent higher.
On the downside, International Personal Finance plummeted nearly 15 percent to a 16-month low on proposed revisions to a credit amendment law in Poland, one of its biggest markets.
The FTSE 100 is up by about 2 percent since the start of 2015, although the index is down 6 percent from a record high of 7,122.74 points reached in April.
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