European stocks track Wall Street higher

[March 23, 2010]  LONDON (AP) -- European stock markets rose modestly Tuesday on the back of an advance on Wall Street and despite ongoing worries about whether an aid package for Greece will emerge at this week's meeting of European Union leaders.

In Europe, the FTSE 100 index of leading British shares was up 46.97 points, or 0.8 percent, at 5,691.51 while Germany's DAX rose 33.15 points, or 0.6 percent, at 6,020.65. The CAC-40 in France was 27.45 points, or 0.7 percent, higher at 3,955.45.

Wall Street was also poised for another solid advance -- Dow futures were up 17 points, or 0.2 percent, at 10,744 while the broader Standard & Poor's 500 futures rose 1.8 point, or 0.2 percent, to 1,163.80.

On Monday, U.S. stocks rose as investors breathed a sigh of relief that U.S. lawmakers ended months of uncertainty and passed major health legislation that would extend benefits to millions and have a wide-ranging effect on companies -- Congressional approval to the bill helped boost drug and technology stocks.

"The global risk rally appears to be back on track, still supported by near-zero interest rates and gradually improving economic data," said Kit Juckes, chief economist at ECU Group.

However, with a dearth of major economic data, volumes remain fairly light and investors continue to fret about whether Greece will end up getting a financial package from its partners in the eurozone or be forced to go to the International Monetary Fund instead.

Greece has around euro20 billion ($27.1 billion) of debt maturing over the next couple of months and the last thing it wants is to pay sky-high premiums to get support in the international bond markets.

The reluctance of Germany to commit cash has raised the specter of a eurozone country going cap in hand to the IMF instead -- Greek Prime Minister George Papandreou said he had no problem approaching the Washington-based Fund if the country's eurozone partners fail to come up with something at this Thursday's meeting.

Stuart Bennett, an analyst at Credit Agricole, said a Greek approach to the IMF would raise significant question marks over the eurozone's ability to solve its own problem.

"Whilst the Greeks would find financing from the IMF to be cheaper it would still imply the same remedy -- hefty budget cuts," said Bennett.

"The difference would be that that this would imply that the current economic policy of a eurozone member is under the control of an external agent rather than the EU, providing little reason to buy the euro even in the short term," he added.

These concerns have dogged the euro for the last few months and continued to weigh on the currency Tuesday -- by mid morning London time the euro was down 0.3 percent at $1.3513.

The big faller in the currency market was the British pound after figures showed inflation in the country was lower than anticipated at an annual rate of 3 percent in February. That reined in market expectations that the Bank of England would have to start withdrawing some of its loose monetary policies soon.

Earlier in Asia, Japan's Nikkei 225 stock average bucked the regional trend and fell 50.57 points, or 0.5 percent, 10,774.15. Hong Kong's market added 54.53 points, or 0.3 percent, to 20,987.78 and South Korea's index rose 0.6 percent to 1,681.82. Australia's index gained 0.9 percent, lifted by major resource companies as commodity prices edged higher.

Oil prices were flat with benchmark crude for May delivery unchanged at $81.25 a barrel.

[Associated Press; By PAN PYLAS]

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