European shares gain on report Greece ready to accept deal terms

European shares gain on report Greece ready to accept deal terms
PHOTO: Reuters

L ONDON - European shares extended gains on Wednesday after a report saying that Greece was ready to accept most conditions from its international creditors to clinch a debt deal.

The Financial Times, citing a letter Alexis Tsipras sent to the heads of the European Commission, the IMF and the European Central Bank, reported the Greek prime minister will accept all his bailout creditors' conditions that were on the table this weekend, with only a handful of minor changes.

"If it's true and a possible debt deal eliminates the'Grexit' idea, then it's a big positive for the market. But I remain skeptical and would like to see some concrete action and official announcements before becoming bullish," Ronny Claeys, senior strategist at KBC Asset Management in Brussels, said.

The euro zone's blue-chip Euro STOXX 50 index was up 2.7 percent by 0937 GMT after falling 1.3 percent a day earlier and slumping more than 4 percent on Monday on Greek jitters. The pan-European FTSEurofirst 300 index was up 1.8 percent, while Germany's DAX gained 2.4 percent.

The stock market opened higher on Wednesday, with investors clinging to hopes of progress in Greece even after it became the first advanced economy to default on a loan with the IMF.

European finance ministers will confer on Wednesday over Greek Prime Minister Alexis Tsipras' request for a new two-year loan to pay debts that amount to nearly 30 billion euros (S$45 billion, US$33.4 billion). French Finance Minister Michel Sapin also said France would still try to reach a deal with Greece before the Sunday referendum.

"There is hope that there could still be some talks over the next couple of days and things do not lead to a complete standstill," said Gerhard Schwarz, head of equity strategy at Baader Bank in Munich.

"We will see some nervousness depending on the expectations regarding the outcome of the referendum."

The fate of Greece's membership in the 19-nation currency bloc hangs in the balance ahead of the referendum on Sunday when Greek citizens will vote on whether to accept the austerity terms of continued international aid. The International Monetary Fund confirmed that Greece had not made a scheduled 1.6 billion euro loan repayment.

Across Europe, Britain's FTSE 100 rose 1.5 percent. France's CAC, up 2.5 percent, outperformed the market following a survey showing France's manufacturing sector grew in June for the first time since April 2014.

Carmakers topped the gainers' list in Europe, with the STOXX Europe 600 Automobile and Auto Parts index rising 3 percent. It was supported by a positive sector note from Exane, which upgraded its stance or raised the price target for Peugeot , Renault, Daimler, Continental , Porsche and Volkswagen.

"Our deep dive into replacement, ownership and demographic trends reveals powerful cyclical support that trumps longer-term structural concerns. Our analysis of labour and capacity trends suggests profitability can also surprise as productivity and utilisation rates rise sharply," Exane analysts said in a note.

Airbus shares rose 4 percent after China placed an order for dozens of wide-body jets from Airbus in a multi-billion-dollar deal that paves the way for a second European aircraft plant in the world's fastest-growing aviation market.

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