Gains on hopes private bondholders share debt

Eurostoxx:2,725.77 (+9.89) Frankfurt DAX:7,107.90 (-13.48) Paris CAC:3,796.55 (+11.75)

EUROPEAN SHARES edged higher yesterday in a choppy session, helped by signs of progress on how private bondholders might share the burden of a solution to Greece’s debt problem.

Volumes were low and likely exaggerating movements. The Euro STOXX 50 volatility index, one of Europe’s main fear gauge, was up 3.8 per cent, signalling investor nervousness.

The heavyweight banking sector was down 0.3 per cent, having dipped in and out of positive territory, while the Thomson Reuters Peripheral Eurozone Banks index rose 1.3 per cent.

Commerzbank was a standout loser in the banking sector, down 5 per cent, with volume double its 90-day daily average, on worries it will have to raise additional money after regulators agreed over the weekend to impose an extra capital charge on big banks to make them safer.

Investors were hopeful progress was being made to a solution to Greece’s debt problems after France said French banks had outlined an agreement to roll over holdings of maturing Greek bonds, while German bankers also voiced interest in this model.

The pan-European FTSEurofirst 300 index of top shares provisionally closed up 0.1 per cent at 1,074.82, holding above a support level near 1,070 – a figure it has recently rallied off – after hitting their lowest level since mid-March on Friday. Volume was 89.4 per cent of its 90-day daily average.

Investors were also hopeful Greece would get approval for an austerity plan being debated in parliament and receive the next tranche of the bailout programme.

If it does not get the next tranche, analysts said Greece could default, triggering a Europe-wide crisis and potential credit market freeze similar to the Lehman collapse.

Akzo Nobel, the world’s largest paint company, was also a standout feature on index and dropped 6.5 per cent in heavy volumes at sixfold its 90-day daily average after it a profit warning due to rising raw material costs.

Technical glitches plagued NYSE Euronext again yesterday, forcing the stock market operator to halt trading on the CAC-40 index of French blue chips for about 45 minutes in late morning. – (Reuters)