European share prices steadied at seven-year highs Tuesday with
stock-market investors unperturbed by a potential showdown between
Greece's new government and its international creditors.
In contrast, nervousness persisted on Greek financial markets,
with the country's government bond yields extending the previous
day's rise. Athens' main stock index fell 0.3%.
Shares elsewhere in Europe had climbed to a fresh postcrisis
peak on Monday despite the election of the left-wing Syriza party
in Greece, and its choice of a right-wing coalition partner that
shares little apart from a vehement antiausterity stance.
Markets steadied on Tuesday, with the Stoxx Europe 600 benchmark
index little changed in early trading.
The coming negotiations between the Syriza government and the
so-called Troika of lenders has left many investors nervous. But
last week's announcement of a bond-buying stimulus program from the
European Central Bank, which drove stocks sharply higher, has
underpinned an overall bullish mood.
With Greece's economy and financial system dependent on external
funding, a compromise deal over the country" outstanding debts is
the most likely outcome of the talks between the new government and
its creditors, said Lucy O'Carroll, chief economist at Aberdeen
Asset Management.
"The gap between Syriza and the Troika is wide, however, and the
path toward agreement remains unclear. Against this background,
markets are likely to remain nervous, though QE may provide comfort
meanwhile," she said.
The euro, which briefly touched an 11-year low after Sunday's
Greek election results, continued to bounce back, rising 0.6%
against the dollar to $1.1321.
Gains were even sharper against the Swiss franc, which fell more
than 1% against the common currency. The move came after Swiss
National Bank's Vice President Jean-Pierre Danthine told a Swiss
newspaper that the central bank remains ready to intervene in the
currency market.
Elsewhere in currency markets, the Russian ruble steadied after
Monday's heavy decline which came after Standard & Poor's cut
the country's credit rating to junk. The ruble gained 0.7% to trade
at around 68 to the dollar, but remains close to its all-time
low.
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