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While you were sleeping: Greek polls offer hope

Tuesday 29th May 2012

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The euro bounced amid polls indicating rising support for Greek parties in favour of the country's international financial rescue, fuelling hope a break-up of the single currency can be avoided.

The beleaguered euro rose as much as 0.9 percent earlier in the session, and was last 0.5 percent stronger at US$1.2573.

Greece's New Democracy party, which supports the bailout plan, ranked first in all six opinion polls published in recent days.

"Anything that allays fears over Greece is a positive. People are just looking for a bit of respite," Bastion Capital's head of equities Adrian Slack told Reuters.

New Democracy would get between 25.6 percent and 27.7 percent of the vote if the election was held today, according to a Reuters report on polls by Eleftheros Typos/Pulse, Proto Thema/Alco, Real News/MRB, To Vima/Kapa and Ethnos/MARC. SYRIZA's support was between 20.1 and 26 percent.

According to the Pulse and MARC polls, New Democracy and the next-biggest pro-bailout party, the socialist PASOK, would together win a parliamentary majority of between 11 and 16 seats in the country's 300-seat parliament.

Europe's Stoxx 600 Index edged nearly 0.1 percent lower for the day. In London, the FTSE 100 rose 0.09 percent; Germany's DAX slid 0.26 percent and the CAC 40 dipped 0.16 percent.

S&P 500 futures expiring in June were up 0.5 percent and Dow futures advanced 0.3 percent. Wall Street was closed for the Memorial Day holiday.

There were also holidays in Europe, closing markets in Denmark, Iceland, Luxembourg, Austria, Norway and Switzerland.

Even with a bright spot towards developments in Greece, there's plenty of concern about another euro zone member: Spain. Spain's IBEX 35 shed 2.2 percent as bond yields climbed amid concern the country is the next one headed for an international financial bailout.

The yield on Spain's 10-year bond rose 16 basis points to 6.47 percent. The premium investors demand to hold the securities instead of their German counterparts widened to as much as 514 basis points, the biggest spread since the euro's introduction.

Still, Spain remains adamant such a rescue won't be needed.

"There are major doubts over the euro zone and that makes the risk premium for some countries very high. That's why it would be a very good idea to deliver a clear message there's no going back for the euro," Prime Minister Mariano Rajoy told a news conference, Reuters reported. "There will not be any [European] rescue for the Spanish banking system."

Many investors aren't so sure, given the recent examples set by Ireland, Portugal and Greece, and the lingering turmoil.

BusinessDesk.co.nz

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