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Optimism on Greece, ECB, lifts European shares

Reuters/London 21 Aug 12 | 01:28 PM

European shares and the euro edged higher on Tuesday on optimism that meetings on Greece's future and a strategy being drawn up by the European Central Bank will lead to progress in solving the euro zone debt crisis.

European shares, which have risen 16 percent since June, opened up 0.2 percent, with the main indexes in London Paris and Frankfurt safely in positive territory.

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After modest rises in Asia and a flat finish on Wall Street, the MSCI global share index was up 0.14 percent at 12:15PM while the euro rose 0.15 percent versus the dollar with smaller gains also against the yen and sterling.

"The dollar is weaker versus the euro ahead of the key meetings this week that may provide clarity on both the immediate outlook for Greece and the outlook in regard to the ECB's plan to buy sovereign bonds," Derek Halpenny Bank of Tokyo Mitsubishi.

"That optimism is persisting today."

Greek Prime Minister Antonis Samaras will meet German Chancellor Angela Merkel, French President Francois Hollande and Eurogroup chief Jean-Claude Juncker this week to try and secure more funding from the European Union, International Monetary Fund and ECB, despite falling behind on its debt cut targets.

Investors are also looking for any clues on the ECB's plans for tackling the crisis after it poured cold water on a report suggesting it was considering buying bonds of euro zone countries if their borrowing costs breached a certain level.

Bond markets remained in a cautious mood ahead of an auction of shorter-term 12-18 month debt by Spain, one of the countries now at the centre of the euro zone crisis, later in the morning.

German government bonds, traditionally favoured by risk adverse investors, waned slightly in early trading but kept to its tight recent range.

"We expect Spain to continue outperforming Italy especially in the short end on continued expectations of...(the) EFSF (bailout fund) and ECB support," RBS strategists said in a note.

Oil and gold drifted within recent ranges.

 

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