Wall Street leads global stock market rally despite ongoing Greek bailout uncertainty

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US leads global stock rally but Greek fears remain

LONDON — World markets mostly rose Tuesday amid a better tone on Wall Street but the advance was checked by ongoing uncertainty about whether an aid package for Greece will emerge at this week’s meeting of European Union leaders.

In Europe, the FTSE 100 index of leading British shares closed up 29.09 points, or 0.5 percent, at a 21-month closing high of 5,673.63 while Germany’s DAX rose 29.77 points, or 0.5 percent, at 6,017.27. The CAC-40 in France ended 24.55 points, or 0.6 percent, higher at 3,952.55.

On Wall Street, the Dow Jones industrial average was up 42.40 points, or 0.4 percent, at 10,828.29 around midday New York time while the Standard & Poor’s 500 index rose 2.29 points, or 0.2 percent, at 1,168.10.

Sentiment in the U.S. was buoyed by slightly better than anticipated housing data — though the National Association of Realtors said sales of existing homes fell by 0.6 percent in February, that was half the rate expected in the markets.

Analysts weren’t getting too excited though, especially as the decline was the third in a row.

Paul Dales, U.S. economist at Capital Economics, warned that the U.S. housing market could be heading for a double dip in both activity and prices and that it could “remain a noose around the neck of the U.S. economy for some time yet.”

For now though, there was relief that it could have been much worse and the improved backdrop provided by the passage of major health care legislation on Sunday remained in place. On Monday, U.S. stocks rose — the Dow closed at a near 18-month high — as investors breathed a sigh of relief that President Barack Obama got enough votes in the House of Representatives to pass the health care bill following months of uncertainty.

With a dearth of major economic data, volumes remain fairly light and investors continue to fret about whether Greece will end up getting a financial package from its partners in the eurozone or be forced to go to the International Monetary Fund instead.

“Equity investors are very wary about the Greek situation,” said David Buik, markets analyst at BGC Partners.

Greece has around €20 billion ($27.1 billion) of debt maturing over the next couple of months and the last thing it wants is to pay sky-high premiums to get support in the international bond markets.

The reluctance of Germany to commit cash has raised the specter of a eurozone country going cap in hand to the IMF instead — Greek Prime Minister George Papandreou said he had no problem approaching the Washington-based Fund if the country’s eurozone partners fail to come up with something at this Thursday’s meeting.

“It looks unlikely that Germany will have a change of heart on any sort of financial support for Greece,” said Neil Mackinnon, global macro strategist at VTB Capital.

“Investors are likely to remain nervous about the prospects on how many eurozone economies could fund themselves during the course of this year and we think this will keep the euro under pressure,” he added.

By late afternoon London time, the was down 0.2 percent on the day at $1.3538 — that was an improvement on earlier when it had fallen as low as $1.3477.

The British pound also fell after figures showed inflation in the country was lower than anticipated at an annual rate of 3 percent in February. That reined in market expectations that the Bank of England would have to start withdrawing some of its loose monetary policies soon.

The pound was 0.2 percent lower at $1.5077 — it too had been even lower in the day, having fallen to $1.4974.

There’s a lot of uncertainty surrounding the pound at the moment, especially ahead of Wednesday’s pre-election budget statement from finance minister Alistair Darling.

“For the pound to move significantly higher against the dollar, Darling must tomorrow announce a set of measures which will take the budget deficit in hand and kick into touch the threat of a credit rating downgrade,” said Jane Foley, research director at Forex.com.

Earlier in Asia, Japan’s Nikkei 225 stock average bucked the regional trend and fell 50.57 points, or 0.5 percent, 10,774.15. Hong Kong’s market added 54.53 points, or 0.3 percent, to 20,987.78 and South Korea’s index rose 0.6 percent to 1,681.82. Australia’s index gained 0.9 percent, lifted by major resource companies as commodity prices edged higher.

Oil prices were up modestly with benchmark crude for May delivery up 21 cents at $81.81 a barrel.