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 The Greek government said it will request a loan extension for up to
six months from its creditors on Thursday morning, although Germany
said there will be no such deal unless Greece sticks to the terms of
its current bailout.
The European Central Bank, meanwhile, is expected to announce later
in the day that it won't cut off emergency funding for Greek banks,
a source told Reuters.
Europe's main bourses followed Asia and Wall Street higher. The
FTSEuroFirst 300 index of leading European shares rose 0.8 percent
to a fresh seven-year high of 1,516 points, and Britain's FTSE 100
hit a 15-year high of 6,921 points.
The flip side of investors' appetite for risk saw increased selling
of core government bonds, pushing the yield on benchmark 10-year
U.S. Treasuries to its highest since the first trading day of the
year.
"While the political situation in Greece remains volatile, the
economic and financial situation is more under control," said
Andreas Clenow, hedge fund trader at ACIES Asset Management. "I
still see a bull market on stocks, and I have been buying into
weakness on the Euro STOXX."
France's CAC 40 share index climbed 1 percent to its highest
since June 2008, and Germany's DAX rose 0.5 percent to within
a whisker of its record high set earlier this month. European
financials were among the biggest gainers, up 2 percent.
Greek stocks got back some of this week's losses to trade 2 percent
higher. Curiously, the Athens index is outperforming both the Dow
Jones Industrial Average and S&P 500 so far this year.
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan rose 0.2 percent.
Japan's Nikkei rose 0.9 percent to its highest since July 2007.
There was little reaction to the Bank of Japan's well-anticipated
decision to stand pat on monetary policy and maintain its massive
stimulus.
U.S. shares are called to open slightly higher, building on
Tuesday's gains that pushed the S&P 500 to another record high.
JOBS DATA JOLTS UK MARKETS
The positive tone to stocks was soured a bit by
stronger-than-expected UK employment and wage data, soothing
investors' fears of deflation but bringing the prospect of an
interest rate hike back into view, however distant.
The FTSE 100 gave back its gains to trade flat on the day, while
sterling jumped almost 1 percent to a seven-year high of 73.65 pence
per euro <EURGBP=>.
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"We see scope for further improvement over the coming months. Next
month's earnings data could be more significant in driving the
policy outlook, given that higher wage settlements at the turn of
the year should start to feed through," said Timo del Carpio,
European economist at RBC Capital Markets.
In bonds, Italian and Spanish 10-year yields both fell around 5
basis points , and three-year Greek yields fell around 100 basis
points to 17.7 percent.
Core government bonds were weaker, with 10-year U.S. yields' rise to
a seven-week high bringing the increase so far this month to 47
basis points. That would be the biggest monthly increase in over
four years.
Investors will look to the minutes of January's Federal Reserve
monetary policy meeting, due to be released later on Wednesday, for
signs the central bank is on track to raise interest rates this
year, maybe as early as June.
In currencies, the euro fell a third of one percent against the
dollar to $1.1375, thanks to its weakness against sterling and the
dollar's widening interest rate and yield advantage. The dollar was
steady at 119.30 yen.
Brent crude oil was down 2.2 percent at $61.11 a barrel after
rallying earlier in the week amid threats to Middle East production
and a falling U.S. rig count. Brent is up around 35 percent from its
low of near $45 a barrel barely a month ago.
A fragile ceasefire between Russia and Ukraine kept emerging-market
investors on edge, with Ukrainian assets in particular coming under
heavy pressure.
Ukraine five-year credit default swaps soared by 985 basis points to
3,669 bps, according to Markit. Its dollar bond yield spreads over
U.S. Treasuries jumped 29 basis points to a record high of 3,038 on
the EMBI Global index.
(Reporting by Jamie McGeever; Editing by Larry King; To read Reuters
Global Investing Blog click on http://blogs.reuters.com/globalinvesting;
for the MacroScope Blog click on http://blogs.reuters.com/macroscope;
for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
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