Europe Markets

FTSE, DAX and CAC Seen Higher on IMF Boost


European stocks were called to open higher on Thursday after the International Monetary Fund confirmed it could step up its loan program to Greece and yields fell on Portuguese bonds following an auction on Wednesday.

Close-up of a pen on stock price chart

The FTSE is called 12 points higher, the DAX in Frankfurt is expected to be up by 36 points and the CAC 40 is called higher by 24 points.

In Asia overnight, shares and the euro were buoyed by IMF approval for an expanded loan program to Greece and better-than-expected earnings data from Goldman Sachs.

An IMF spokeswoman confirmed late on Wednesday that the fund's executive board had approved the possibility of more resources being made available for Greece, but she added they would be dependent on the Greek government reaching a deal with private bondholders.

Greece must agree a deal before 14.5 billion euros of bond redemptions come due at the end of March, but this latest announcement by the International Monetary Fund suggests there is some optimism that an agreement can be reached.

Dow Jones reported that the Greek administration and private bondholders were discussing a lower coupon of 3 percent on new bonds, rising to 4.5 percent rather than 4.5 percent to 5 percent as initially proposed.

A source familiar with the discussions said progress was being made and "the aim is to complete talks by the end of the week." French newspaper Les Echos reported simultaneously that the Greek finance ministry had confirmed a deal would be reached by Friday or over the weekend.

However, the report added that an unnamed spokesman said the ministry was "optimistic" that a deal could be reached so soon.

The FT reported on Wednesday that embattled British bank the Royal Bank of Scotland could offer CEO Stephen Hester a £1.3 million bonus ($2 million) in addition to his £1.2 million ($1.85 million) salary.

The paper says the bonus will be confirmed in February but quotes Philip Hampton, chairman of the RBS board, who claims Hester deserves the bonus for his efforts to drive down the bank's balance sheet and exposure to risk.

Spain and France will both hold long term bond auctions on Thursday. The auction of 3-5 billion euros ($3.9-$6.4 billion) in long term Spanish bonds is due to take place at 9:30 am London time, while France will tender 6.5 to 8 billion euros ($8.4-$10.2 billion) in 2014, 2015 and 2016 bonds at 9:50 am.

France will hold a second auction of long term bonds at 10:50 am.

German Chancellor Angela Merkel will host the leaders of Portugal, Sweden and Austria on Thursday evening after meeting with Palestinian leader Mahmoud Abbas in Berlin.

Merkel and Abbas are due to meet at 2:30 pm London time followed by a press conference at 3:30 pm.

French retail giant Carrefour will announce its fourth quarter sales data at 6:30 am London time and British online retailer Asos is also due to report third quarter sales on Thursday.

Brewer SABMiller will release third quarter trade data on Thursday and publisher Pearson will give a trading update.

Related Tags