European markets steady as Greek debt fears ease amid hopes of a bigger bailout

European markets steady as Greek debt fears ease

LONDON — European stock markets rose modestly Thursday as investors hoped for a quicker — and perhaps bigger — bailout for debt-ridden Greece and after a fairly upbeat assessment of the U.S. economy by the Federal Reserve.

In Europe, the FTSE 100 index of leading British shares was up 20.08 points, or 0.4 percent, at 5,606.69 while Germany’s DAX rose 13.16 points, or 0.2 percent, to 6,097.50. The CAC-40 in France was 16.71 points, or 0.4 percent, higher at 3,803.71.

Wall Street was poised for a fairly perky opening following Wednesday’s late rally into positive territory — Dow futures were up 19 points, or 0.2 percent, at 11,034 while the broader Standard & Poor’s 500 futures rose 3.7 points, or 0.3 percent, to 1,193.80.

Markets are less jittery Thursday following two days of turmoil stoked by Standard & Poor’s decision to downgrade its ratings on Portugal, Spain and Greece — the latter’s bonds are now junk status.

With stocks sinking — along with markets’ faith in the eurozone’s ability to deal with the debt crisis enveloping some of its members, notably Greece — policymakers stepped up their commitment on Wednesday. There are now hopes that Germany has finally accepted it has to act fast in handing over its €8.4 billion share of a Greek bailout package agreed earlier this month involving the eurozone and the International Monetary Fund.

There is growing talk that Greece could be offered up to €130 billion over three years — thereby giving the country much needed breathing space to get a handle on its debt.

Whatever materializes, markets are now more confident that Greece will get enough money to pay off €8.5 billion to debtors on May 19.

“The knee jerk panic following the Greek downgrade to junk status from S&P has unwound a little as the market has begun to speculate that any support package would now be notably higher,” said Stuart Bennett, an analyst at Calyon Credit Agricole.

However, investors remain on edge, given that the Greek debt crisis has shown to be a persistent problem.

“Whenever the major EU nations and the IMF seem willing to dole out bailout cash markets react well, but any hesitancy, or indeed the prospect of further candidates for default, could see a return to the red,” said Anthony Grech, market strategist at IG Index.

Solid economic data also helped to support stocks and the single currency — by late morning London time, the euro was trading 0.5 percent higher at $1.3271. On Wednesday, the euro had tumbled to a one-year low as the Greek crisis escalated.

The European Commission said economic sentiment in the 16 countries that use the euro rose above its long-term average during April despite mounting concerns about the debt crisis afflicting Greece.

Its main economic sentiment indicator rose by 2.7 points to a 25-month high of 100.6 in the eurozone during April, with the majority of countries posting across-the-board improvements — Germany, the eurozone’s biggest economy, showed a substantial rise.

Also supporting stocks in Europe were reassuring comments from the Fed.

The central bank, at the end of a two-day policy meeting, said the labor market is “beginning to improve” and noted that housing starts have edged up. Crucially for investors, it continues to expect to keep rates low for an “extended period” to help strengthen the economy.

“Fortunately the Fed threw a much needed cold bucket of water on the frayed nerves of many debt and equity traders by reassuring them that rates would remain near zero for some months to come,” said David Buik, markets analyst at BGC Partners.

Earlier in Asia, Hong Kong’s Hang Seng fell 170.48 points, or 0.8 percent, to 20,778.92, and South Korea’s Kospi shed 5.49 points, or 0.3 percent, to 1,728.42.

Elsewhere, Shanghai’s market dropped 1.1 percent and Australian stocks retreated 0.8 percent.

Japan’s market was closed for a holiday.

In the oil markets, benchmark crude for May delivery was up 68 cents at $83.90 a barrel.

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.