Europe shares bounce as optimism on Greece wins out

28 Apr 2015 | Author: | No comments yet »

European stocks jump as Greece reshuffles debt negotiators.

Meanwhile, a boardroom shake-up pushed up shares of car maker Volkswagen AG, but Deutsche Bank AG shares fell as legal costs undercut the company’s earnings. Volkswagen AG VOW3, +5.04% shares topped the DAX, rising 5.3% after the car maker’s chairman, Ferdinand Piech, unexpectedly resigned over the weekend following a failed move to oust Chief Executive Martin Winterkorn.

The largest bank in Germany said first-quarter net profit dropped about 50% to 559 million euros ($607.8 million), cut down by penalties the company agreed to pay to settle allegations over manipulating the London interbank offered rate, or Libor. Shares of HSBC Holdings PLC HSBA, +3.11% rose 3.1% following a Sunday Times report the lender is weighing a deal valued at 20 billion pounds ($30.4 billion) to spin off its British retail bank. The moves came after media reports Greek Prime Minister Alexis Tsipras made changes to the Greek team that is negotiating with its international creditors.

European stocks in recent weeks have seen bouts of selling in part on fears that Greece appears unlikely to reach a deal with creditors and that it will leave the eurozone. “The situation in Greece is continuing to drag on and people are losing patience,” said Jameel Ahmad, chief market analyst at FXTM, adding that he believes Greece will be able to stay in the eurozone. “There is an argument that in the longer-term, the European economy might be better without its weakest member. However, I don’t believe the euro would not be vulnerable to sudden losses if Greece leaves [the eurozone],” Ahmad said. “Greece has the potential to be the factor that sends the euro to parity,” against the greenback, he said. The euro EURUSD, +0.12% has managed to push back above $1.09 against the U.S. dollar, largely because of dollar-softness after weaker-than-expected U.S. economic data. The ECB’s asset-buying program is set to run through September 2016, and “if it continues to have the desired impact on economic data, then European stocks have the room to continue moving higher.”

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