EU, IMF Prepare to Support Greece, Euro Rises

123jump.com Staff
25 Mar, 2010
New York City

European leaders agree on the need to involve the IMF and offer bilateral assistance to Greece. Greek bonds gained and the euro advanced against the dollar the pound. Financial markets in Europe edged higher.

[R]3:45 PM Frankfurt – European leaders agree on the need to involve the IMF and offer bilateral assistance to Greece. Greek bonds gained and the euro advanced against the dollar the pound.[/R]

European leaders appear to reach an agreement to offer financial assistance to Greece with the help of the IMF. Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels that bilateral loans from EU member nations and the IMF will provide a financial guarantee to Greece.

He added that Greece many need this assistance because the nation has a “credible” deficit reduction plan and financial markets “will eventually see that.”

Other European leaders appear to support bilateral aid and the IMF involvement too. Austrian Finance Minister Josef Proell endorsed the plan and Dutch Prime Minister also expressed his approval of the plan.

Spanish Prime Minister Jose Luis Rodriguez Zapatero noted in comments to reporters that seeking help from the IMF is not negative for the euro and for the region.

Greece needs to raise nearly 17 billion by the end of May to repay bonds that are maturing in two months. On April 20 bonds worth 8.2 billion euros are maturing and on May 19 bonds worth 8.2 billion euros are due for payment.

ECB President Jean Claude Trichet reversed his earlier plan to not extend emergency assistance to Greece after the expiry of the current collateral policy at the end of 2010. Trichet said today that Greek bonds will be accepted for refinancing next year in rating agency Moody’s lowered its rating on Greek sovereign bonds matching other rating views.

Europe Markets Review

In London FTSE 100 Index traded higher 18.65 or 0.33% to 5,696.53, in Paris CAC 40 Index increased 23.20 or 0.59% to 3,973.01 and in Frankfurt DAX index traded higher 42.51 or 0.70% to 6,081.51. In Zurich trading SMI increased 7.63 or 0.11% to 6,887.58.

The euro edged up as much as 0.4% in Frankfurt and New York trading after the EU leaders workout an agreement to support Greece.

Greek 10-year bonds yields decreased to 6.33%, still nearly twice the level of German bunds.