European stocks up as euro ministers prepare to meet to discuss Greek debt crisis

European stocks up ahead of euro ministers meeting

LONDON — European stock markets and the euro currency won some respite Monday ahead of a meeting of eurozone finance ministers in Brussels, where the Greek debt crisis will likely top the agenda. However, with many Asian markets and the U.S. closed for public holidays, trading volumes are expected to remain light.

The FTSE 100 index of leading British shares was up 40.4 points, or 0.8 percent, at 5,182.86 while Germany’s DAX rose 32.73 points, or 0.6 percent, at 5,533.12. The CAC-40 in France was 31.16 points, or 0.9 percent, higher at 3,630.23.

The main point of interest for Europe’s markets will continue to be the debt problems afflicting Greece, as finance ministers from the 16 euro countries gather in the wake of last Thursday’s meeting of EU leaders. On Tuesday, the finance ministers of the full 27-nation European Union meet.

Though EU leaders gave Greece some vocal support, no money or guarantee was offered, primarily because Germany was not willing to stump up any cash. Instead, all agreed that Greece’s progress in bringing down its budget deficit will be closely monitored and it would not be allowed to threaten the eurozone. Markets interpreted the latter comment as an implicit guarantee that eurozone policymakers will help the country if its own efforts fail.

An ensuing narrowing in spreads between German and Greek bonds — a sign that the markets think a Greek default is becoming less likely — has diminished expectations that anything substantially new will emerge later.

Daragh Maher, an analyst at Calyon Credit Agricole, said there’s now a growing feeling in the markets that the initial storm may has passed and the recently savaged euro could enjoy a return to favor.

“Those currently positioned against the euro on the basis of future Greek wobbles run the risk that the details of the support will be released, likely fostering a substantial narrowing of Greek spreads and an associated rally in the euro,” said Maher.

By midday London time, the euro was up 0.1 percent at $1.3627. Last week, at the height of the Greek fiscal concerns, the euro had slid to a nine-month low of $1.3533.

Besides Greece, investors have fretted about the public finances in Spain, Portugal and Ireland.

Dubai is also a growing concern amid fears that the highly indebted emirate may repay creditors less than the amounts due — it was November’s debt postponement from Dubai World, a government investment company with around $59 billion in debts, that stoked the markets’ concerns about overborrowed countries.

Dubai’s stock market fell sharply while the cost of insuring against the emirate’s debts edged back up.

“While the Dubai problem does involve relative small amounts of outstanding debt, it will remind investors of how difficult a solution for Europe’s peripheral might become,” said Hans Redeker, global head of foreign exchange strategy at BNP Paribas.

Earlier, much of Asia was closed for the Lunar New Year holiday, including Hong Kong, Shanghai, Singapore and Seoul.

However, Japanese and Australian markets fell as investors reacted to China’s move late Friday to curtail bank lending to cool off strong growth there.

Better-than-expected Japanese fourth quarter economic growth figures failed to lift Tokyo’s benchmark Nikkei 225 index, which slid 78.89 points, or 0.8 percent, to close at 10,013.30. Analysts said that the monetary tightening in China — the second such move in a month — and uncertainty about the economic outlook in coming quarters weighed on sentiment.

“The GDP figures do signal the economy is recovering, so it wasn’t a negative. But otherwise we haven’t gotten a lot of upbeat numbers lately,” said Kazuhiro Takahashi, a trader at Daiwa Securities SMBC in Tokyo. “There are a lot of players out of the market this week, and I don’t expect to see any big moves for a couple days.”

Japan’s gross domestic product grew at an annual pace of 4.6 percent in the October-December period, keeping Japan just ahead of China as the world’s No. 2 economy. Japan’s nominal GDP for the 2009 calendar year came to about $5.1 trillion, ahead of China’s $4.9 trillion.

Australia’s benchmark S&P/ASX200 fell 16.6 points, or 0.4 percent, to 4,545.5.

Wall Street is closed for the Presidents Day holiday.

Elsewhere, oil prices were flat with benchmark crude for March delivery down 4 cents to $74.09 a barrel.

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Associated Press Writer Malcolm Foster in Tokyo contributed to this report.