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Greek debt breakthrough market boost fades
(Update) Royal Bank of Scotland and Lloyds among top risers on FTSE as earlier market gains are pared.
(UPDATE 16:15) Market relief that a third Greek aid package was finally agreed last night soon turned to weariness over the eurozone’s ongoing weak economic strength and the potential fiscal cliff in the US, paring gains on European stock markets and sending Wall Street lower.
The OECD, an organisation representing wealthy countries, cut its 2013 growth forecast for the developed world, anticipating a second annual contraction in the eurozone.
The FTSE 100, which had risen to above 5,800 in morning trade, was heading for more muted gains of 8 points at 5795 in afternoon trade.
The Euro slipped throughout the day, down 0.3% to $1.2927.
In the US, shares were down despite a generally upbeat collection of economic data readings, with reports on consumer conference and durable goods both better than expected.
The concerns over the world economy and US fiscal cliff sent commodities lower, with Brent oil price futures down 0.9% to $109.90 after a report forecast that US crude supplies
(09:09) Greek debt breakthrough boosts marketsBritain’s markets made gains in early Tuesday trade after international lenders last night reached a deal with Greece to release the next tranche of aid to the country.
The FTSE 100 added 0.5%, or 29 points, to 5,815 and the Mid-250 index took on 0.33%, or 39 points, to 11,882.
Talks between the International Monetary Fund (IMF), eurozone finance ministers and Greek officials continued late into the night to reach a deal to reduce the country’s debt by €40 billion (£32 billion), or reducing it to 124% of GDP by 2020. The group was also aiming to reduce the country’s debt to below 110% by 2022.
The agreement came as interest rates on official loans will be cut and the maturity will be extended from 15 to 30 years. The country will now receive €43.7 billion (£36 billion) in aid, with the first tranche of budgetary and bank support to be released in December.
In Europe markets also made gains following the deal: Germany’s DAX index gained 0.65% to 7,339; France's CAC 40 index rose 0.62% to 3,522; and the FTSEurofirst 300 index of top European shares increased 0.5% to 1,110.
Royal Bank of Scotland (RBS.L) jumped 10.2p, or 3.6%, to 295p to the top of the FTSE 100 as analysts at UBS increased their rating of the stock from ‘neutral’ to ‘buy’ and raised its target price from 287p to 328p. Barclays analysts also upped their price target from 270p to 330p with an ‘overweight’ rating.
Semi-state owned bank Lloyds (LLOY.L) added 1p, or 2.3%, to 46p as analysts at Barclays raised their target price from 27p, to 35p with an ‘underweight’ rating.
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