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 Greek shares rose even though talks over a new debt deal broke down
on Thursday, the euro was down just 0.3 percent against the dollar
and major European stock markets gained in early trade.
That in part reflected gains in Asia, where traders said markets
were still reacting to a Federal Reserve meeting on Wednesday, when
the Fed seemed more cautious on the idea of raising U.S. interest
rates this year.
"We're really only up on the back of the strength in the U.S., but
I'd still be inclined to sell the rallies because of the Greek
situation. It would be a brave man who goes in 'long' into the
weekend," said Richard Griffiths, associate director at Berkeley
Futures.
Italian government bond futures, the yardstick for bonds issued by
the euro zone countries most vulnerable to contagion from Greece,
fell in early trade, then recovered to trade higher. Italian 10-year
yields were last up 1.4 basis points at 2.27 percent.
The subdued reaction of many markets in recent weeks reflects the
argument that the exposure of Europe's private sector to Greece is
now minimal and that a default or even its departure from the euro
may have little effect.
The pan-European FTSEurofirst 300 index rose 0.7 percent, including
gains for Spanish and Italian stocks.
Asian shares earlier had risen for a third consecutive day, although
optimism was tempered by another 6 percent fall in Shanghai <.SSE>,
now down more than 13 percent for the week.
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Regulators moved again this week to tighten margin financing in
China - a key factor in the market's rally this year - and a round
of initial public offerings has also increased share supply.
"First ... room for further monetary easing could be less than
anticipated, and inflows of new investors could have already
peaked," Bosera Asset Management Co said in a note to clients on the
correction.
"Secondly, a highly-leveraged bull (market) is not sustainable,"
Bosera said, citing moves by the government to reduce margin loans,
which the asset manager estimates have reached between 3 trillion
and 4 trillion yuan.
In commodities, oil prices were weaker, but output was broadly met
by demand.
U.S. crude futures edged lower to $60.33 a barrel. Brent gained 10
cents to $64.35.
(Additional reporting by Samuel Shen, Pete Sweeney in Shanghai and
Hideyuki Sano in Tokyo; Editing by Larry King)
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