World markets buoyed by earnings stocks despite ongoing Greek debt fears

World stocks buoyed by earns despite Greek fears

LONDON — World markets mostly rose Tuesday after strong earnings from British bank Barclays PLC and U.S. conglomerate Kraft Foods Inc., although investors, particularly in Greece, remained worried by the debt crisis enveloping the country.

In Europe, the FTSE 100 index of leading British shares ended up 76.59 points, or 1.5 percent, to 5,244.06. Barclays spiked 6.5 percent after it reported a fourth quarter profit of 6.9 billion pounds ($10.8 billion), more than eight times larger than a year earlier, largely because of the sale of one of its businesses.

Royal Bank of Scotland Group PLC, which is over 80 percent owned by the British government, and Lloyds Banking Group PLC, which is 41 percent state-owned, both advanced around 5 percent in Barclays’ slipstream.

Deutsche Bank AG and Credit Agricole SA also enjoyed solid gains, helping Germany’s DAX to rise 81.02 points, or 1.5 percent, to 5,592.12 and the CAC-40 in France to advance 59.82 points, or 1.7 percent, to 3,669.04.

On Wall Street, investors were also buoyed by better than expected earnings from Kraft Foods and retailer Abercrombie & Fitch — the Dow Jones industrial average was up 112.84 points, or 1.1 percent, to 10,211.98 at around midday New York time while the broader Standard & Poor’s 500 index jumped 13.09 points, or 1.2 percent, to 1,088.60.

The upbeat corporate news around the world was a welcome diversion for market attention away from the ongoing worries about Greece’s debt problems.

Fear related to a possible Greek debt default has stalked markets over the last couple of weeks.

That fear lingered Tuesday, the finance ministers of the eurozone and wider EU told Greece that it has until March 16 to prove its commitment to reducing its deficit or new budget cuts beyond what is already planned will have to be enacted.

The spread between Greek and German ten-year government bond yields has widened since Monday’s close from around 3.05 percentage points to a high of 3.33 percentage points earlier Tuesday before narrowing slightly to 3.24 points — the bigger the spread, the greater the markets’ fear.

Despite the modest narrowing, the spread remains on an upward trajectory, suggesting that tensions linger and investors remain skeptical at best that the Greek government can pull off its austerity plan.

Greece has promised to reduce its budget gap from 12.7 percent of gross domestic product to 8.7 percent this year as it attempts to dampen down on market fears that it could eventually default on its debt and/or require a bailout from the 16 countries that use the euro.

That skepticism was evident in the performance of Greek stocks Tuesday as investors returned from their holiday, still unsure about how the crisis will pan out over the coming weeks and whether more austerity would be on the cards. The Athens composite index closed down 1.7 percent.

Despite ongoing Greek debt concerns, the euro has managed to win some respite Tuesday, rising 1 percent to $1.3729 by late-afternoon London time.

“It seems now that any euro bounce from here will not be driven by some magically detailed rescue plan,” said Daragh Maher, deputy head of global foreign exchange strategy at Calyon Credit Agricole.

“Instead, the markets will want to become more confident that Greece will be able to deliver the difficult fiscal tightening expected of it, and that other eurozone nations will be sufficiently supportive of its efforts to remind markets that help can be provided if required,” he added.

Earlier Asian markets ended modestly higher though trading levels were extremely low what with holidays in Shanghai, Hong Kong, Taiwan, Singapore and Malaysia.

Japan’s Nikkei 225 stock average rose 20.95 points, or 0.2 percent, to 10,034.25 and South Korea’s Kospi gained 7.39, or 0.5 percent, to 1,601.05.

Australia’s benchmark climbed 0.5 percent while Indonesia’s market jumped 0.8 percent and New Zealand’s stock index advanced 0.9 percent.

Oil prices spiked sharply higher as the dollar dropped and amid renewed tensions over Iran after President Mahmoud Ahmadinejad said the country was moving ahead to expand its enrichment capacities by installing more advanced machinery at its main enrichment facility.

Benchmark crude for March delivery was up $2.80 at $76.93 in electronic trading on the New York Mercantile Exchange. With markets closed Monday in the U.S., the contract last settled on Friday, falling $1.15 to $74.13.