European Markets Higher on Greek Debt Deal and Higher Oil

Lucy Stoeva
25 May, 2016
New York City

European markets recorded solid gains on Wednesday after Greece reached an agreement with its creditors to unlock bailout funds, while oil price advanced and boosted energy stocks. Marks & Spencer lost 10.2% after the retailer warned that apparel business restructuring would hurt short term profit.

[R]4:00 PM Frankfurt, Germany – Stock markets in Europe recorded solid gains on Wednesday after Greece reached an agreement with its creditors to unlock bailout funds, while oil price advanced and boosted energy stocks. Marks & Spencer lost 10.2% after the retailer warned that the restructuring of its apparel retailing business would hurt profits.[/R]

Stock markets in Europe recorded solid gains on Wednesday after Greece reached an agreement with creditors to unlock bailout funds, while oil price advanced and boosted energy stocks.

According to the latest agreement, Greece will receive €10.3 billion in new loans.

The deal still has to be signed by each of the 19 countries in the euro zone, but the finance ministers and the International Monetary Fund already approved the progress Greece made in terms of reforms.

The euro zone ministers also agreed on a road map on debt relief for Greece.

The new round of financing will help Athens with its debt payments to the IMF and the European Central Bank and to avoid defaulting in July.

The Greece accord sent the euro 0.2% higher against the dollar to $1.1163.

Oil prices increased after data suggested a decrease in U.S. crude inventories. Brent crude oil futures climbed 1.6% to $49.39 per barrel, while WTI crude oil futures added 1.15% to $49.18 per barrel.

Among energy shares, Norway’s Seadrill soared 15.3%, Spain’s Repsol rose 3.7%, and Italy’s Eni jumped 3.5%. In the U.K., Royal Dutch Shell, BP, and Tullow Oil gained more than 2% each.

German business confidence increased in May, according to a closely watched private survey. The Ifo index rose to 107.7 in May from 106.7 in April, the Ifo Institute for Economic Research said.

In London, the FTSE 100 index climbed 43.59, or 0.7%, to 6,262.85, while in Frankfurt, the DAX index added 147.90, or 1.47%, to 10,205.21.

In Paris, the CAC 40 index rose 50.12, or 1.13%, to 4,481.64.

Marks & Spencer Group Plc lost 10.2% to 399.40 pence after the retailer warned that the planned revival of its clothing and homeware business would hit short-term profits.

Annual underlying profits in the year ended in April grew 4.3% to £689 million.

Including one-time costs, however, profit fell 18.5% to £488.8 million. The extraordinary costs were mostly related to store closures in its international business.

Steve Rowe, the new CEO of the company, announced a plan to lower apparel prices and improve style, fit and quality. The changes also include less sales promotions and more staff in the stores.