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September 26, 2011

Global Stocks Rise on Eurozone Hopes

by Mil Arcega

World markets rose sharply Tuesday on hopes that Greece will be able to avoid a disastrous default. The country's finance minister told journalists that Greece expects to receive bailout disbursements on time, and there will not be a suspension of payments to other eurozone countries that also are plagued by high levels of debt. Reports that European leaders may be considering bolder moves to ease the region's debt crisis helped to ease investor concerns, but some European leaders are downplaying the speculation as premature.  

Financial markets reacted to positive news about Greece with big rallies across the board.  

In Asia - Tokyo's Nikkei was up nearly 3 percent. Hong Kong's Hang Seng closed more than 4 percent higher.  

Major indexes from London to Germany saw even larger gains, following assurances from Greek Finance Minister Evangelos Venizelos.

"The disbursement will take place and it will take place on time," said Venizelos.

The Greek government still must carry out highly unpopular austerity measures before eurozone countries approve another installment on Greece's first bailout package.  

Without the $10 billion disbursement, Greece says it will run out of money by mid-October.  

Greek Prime Minister George Papandreou spoke to German business leaders on Tuesday.

"I can guarantee that Greece will live up to all its commitments," said Papandreou. "I promise you, we Greeks will soon sight our way back to growth and prosperity after this period of pain."

But many in Greece are not so optimistic. Demonstrators, angry about wage cuts and tax increases, say poor people are unfairly targeted.

"Enough is enough," said a man. There is no way they can continue like this.  We will protest, we will strike because they are not fair.  The measures are not fair.  The same people keep suffering."

Despite continuing unrest in Greece, European leaders expressed confidence that painful reforms will lead to a more stable Greek economy.

German Chancellor Angela Merkel promised to do everything in her power to keep Greece in the European Union.  But she also moved to curb speculation about a larger eurozone bailout fund.

"We are simply not available for further economic stimulus programs," said Merkel. "The idea that growth can only be achieved through more debt is wrong - I'm deeply convinced of that."

Some economists say Europe's $600 billion emergency fund is not large enough to cover other European countries that may need assistance in the future.

For now, expectations of a possible end to the Greek crisis helped to lift U.S. stocks for a third consecutive session.