World stocks rise amid Greek bank hopes

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World stocks rise amid Greek bank hopes

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World stocks rebounded Friday on anticipation that central banks will help Greece.

15 June,2012 08:16 pm

.Uncertainty ahead of the Greek elections has weighed heavily on sentiment this week, but was lifted somewhat Friday by the prospect that central banks would provide monetary stimulus if political parties opposed to maintaining terms of the Greek bailout win the election on Sunday.Investors fear that reneging on its bailout terms would force Greece to leave the euro currency union, with uncertain consequences for financial markets and the global economy.Britains FTSE 100 rose 0.3 percent to 5,481 while Germanys DAX gained 1.1 percent to 6,208. Frances CAC-40 rose 1.7 percent at 3,085.The Dow Jones industrial average was up 76 points to 12,728 after the opening bell. The Standard & Poors 500 rose seven points to 1,336. The Nasdaq composite rose 15 to 2,851. In Asia, Japans Nikkei 225 closed flat at 8,569.32, but Hong Kongs Hang Seng jumped 2.3 percent.The Bank of England and the U.K. government said they stand ready to offer up to 140 billion pounds ($217 billion) in cheap loans to lenders that might have trouble raising money from credit markets, which could tighten up if the Greek elections results spook investors.The European Central Bank, meanwhile, continues to offer unlimited amounts of cheap short-term loans as well, even though its chief, Mario Draghi, has warned that Europe governments need to make bold decisions to shore up confidence in the euro.Draghi said Friday the ECB has supported banks against the ongoing debt crisis with €1 trillion ($1.26 trillion) in emergency credit to banks and that now it was the governments turn to act.Germany, however, is reluctant to accept any big moves that might cost Berlin more money, such as jointly-issued eurobonds. Any solutions would be announced at a June 28 summit of world leaders.I think Europe will do something because they have to save Greece and Spain. If they dont, it will be the end of Europe, said Francis Lun, managing director of Lyncean Holdings in Hong Kong. I think maybe the worst is over. I think we have reached the nadir. Finally they have been pushed to do something.Illustrating the urgency of the situation, Spain and Italy have seen their borrowing rates jump higher this week. Should the two countries find it too expensive to finance themselves on capital markets, they would need money from Europes bailout funds. The problem is their combined financing needs dwarf all the sums EU countries could provide.Spanish Prime Minister Mariano Rajoy has asked EU leaders to push the European Central Bank to restart a program of purchases of government bonds that helped ease the countrys borrowing rate last fall. The ECB, however, remains reluctant to do so, saying it would provide only temporarily relieve symptoms of underlying problems that need fixing by European governments.In the U.S., speculation has grown that the U.S. Federal Reserve was preparing to pump more money into the economy to breathe life into its slackening recovery. Weak employment figures from the Labor Department showed hiring remains slow while inflation remains tame.Elsewhere, benchmarks stock indexes in Singapore, Taiwan, mainland China and India closed higher. South Koreas Kospi fell 0.7 percent.Benchmark oil for July delivery rose 76 cents to $84.67 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.29 cents to finish at $83.91 per barrel on the Nymex on Thursday.In currencies, the euro rose to $1.2623 from $1.2600 late Thursday in New York. The dollar fell to 78.68 yen from 79.27 yen.