Reuters and AFP
LONDON/HONG KONG–Financial markets on Monday greeted the appointments of technocratic leaders in eurozone debt hot spots Italy and Greece with cautious optimism, boosting stocks. Italian bonds, which were hammered last week in the latest phase of the eurozone debt crisis, eased away from crisis levels, although a big test lay ahead with the sale of 3 billion euros of five-year government bonds. The euro fell, however, after getting a boost in Asian trading.
Italy’s president appointed former European Commissioner Mario Monti on Sunday to head a new government with the task of restoring market confidence in the eurozone’s third largest economy, whose debt burden is too big for the bloc to bail out. Meanwhile in Greece, Lucas Papademos, a former European Central Bank (ECB) vice president, has been sworn in as prime minister and is under pressure to implement radical reforms. “We have now got two strong characters who are prepared to put public interest ahead of personal interest and they have a lot of goodwill to start with. The challenge for them now is to implement the fiscal austerity and budget reforms,” said Mike Lenhoff, chief strategist at Brewin Dolphin. World stocks as measured by MSCI were up 0.2 percent, leaving them around 7 percent down for 2011. In Europe, shares extended the previous session’s sharp rally. The FTSEurofirst 300 index of top European shares was up 0.2 percent after rising 2.2 percent on Friday on political progress in Italy. Frankfurt’s DAX 30 gained 0.14 percent and the CAC 40 in Paris was 0.18 percent higher. Italy’s FTSE MIB was up 1.5 percent. Banks, many of which are highly exposed to Italy and Greece and have suffered this year on the region’s debt crisis, were 0.9 percent higher and featured among Europe’s the top gainers.