Greek deal optimism pushes shares to 7-year high

Greek stocks helped push a key pan-European share index to a seven-year high on Wednesday on fresh optimism that Athens would reach an agreement with its international lenders.

Greek stocks rose 3 per cent after a source close to the government said Greece intends to ask on Wednesday for an extension for up to six months of a loan agreement with the euro zone, on conditions to be negotiated. A Greek government spokesman later confirmed the move.

Shares in Italy and Spain, heavily indebted countries that are seen as coming under market pressure if Greece were to leave the euro zone, outperformed. Italy’s FTSE MIB was up 0.9 per cent and Spain’s Ibex rose 0.7 per cent.

“Everyone is buying the ones that are most affected,” Mike Reuter, a trader at Tradition, said.

The pan-European FTSEurofirst 300 index rose 0.4 per cent to 1,510.75 points, having set a fresh seven-year high at 1,512.63 points in early deals.

Providing further support to the FTSE MIB, shares in oil and gas group Eni rose 3.4 per cent after the Italian company said it would pay a cash dividend even after a sharp fall in oil prices hit net profit in the fourth quarter of last year.

Adding to the positive sentiment in the oil sector, French oil services group Technip said it would raise dividends by 8 per cent and posted a 20.6 per cent rise in adjusted core profit for the fourth quarter as an increase in orders helped it defy the sector slowdown.

BANKS RALLY

Banks received a boost after results from France’s Credit Agricole beat forecasts. The bank’s shares were up 4.1 per cent.

Around 58 per cent of European companies that have reported so far have met or beaten consensus forecasts, although financial firms have lagged, with 52 per cent of them falling short of expectations, StarMine data showed.

Smaller Italian lenders also surged on speculation about possible merger activity. Daily Il Messaggero said in an unsourced report that Banca Popolare di Milano could tie up with smaller rival Banca Popolare dell'Emilia Romagna , sending shares in the latter up 3.5 per cent. Shares of Banca Popolare di Milano were up 2.5 per cent.