By Carla Mozee, MarketWatch
London stocks at record high
European stocks rose Monday, turning higher following reports
that Greece has made changes to a key team negotiating with its
international creditors.
Meanwhile, a boardroom shake-up pushed up shares of car maker
Volkswagen AG, but Deutsche Bank AG shares fell as legal costs
undercut the company's earnings.
The Stoxx Europe 600 rose 1% to 412.42, with all sectors
climbing out of the red.
In Frankfurt, the DAX 30 shook off earlier losses and surged
1.9% to 12,039.16. Volkswagen AG shares topped the DAX, rising 5.3%
after the car maker's chairman, Ferdinand Piech, unexpectedly
resigned
(http://www.marketwatch.com/story/volkswagen-chairman-piech-resigns-2015-04-26)
over the weekend following a failed move to oust Chief Executive
Martin Winterkorn.
But Deutsche Bank (DB) shares fell 4.6%, the worst session since
January 2014, according to FactSet data. The largest bank in
Germany said first-quarter net profit dropped about 50%
(http://www.marketwatch.com/story/deutsche-bank-profit-halves-on-litigation-costs-2015-04-27)
to 559 million euros ($607.8 million), cut down by penalties the
company agreed to pay to settle allegations over manipulating the
London interbank offered rate, or Libor.
In Paris, the CAC 40 switched higher, rising 1.3% to 5,268.91.
Spain's IBEX 35 rose 1.2% to 11,640.20. The Spanish government has
raised its 2015 growth forecast
(http://www.marketwatch.com/story/spain-to-lift-its-economic-growth-target-for-2015-2015-04-27).
The U.K.'s FTSE 100 closed at a record high
(http://www.marketwatch.com/story/ftse-100-moves-lower-but-hsbc-outperforms-2015-04-27),
rising 0.5% to 7,103.98. Shares of HSBC Holdings PLC rose 3.1%
following a Sunday Times report the lender is weighing a deal
valued at 20 billion pounds ($30.4 billion) to spin off its British
retail bank.
Greece: The Athex Composite climbed 4.4% to 794.84. Meanwhile,
the yield on 2-year debt fell 3.2 percentage points to 21.9%,
according to Tradeweb data, as prices rose.
The moves came after media reports Greek Prime Minister Alexis
Tsipras made changes to the Greek team
(http://www.reuters.com/article/2015/04/27/us-eurozone-greece-varoufakis-idUSKBN0NI0VI20150427)
that is negotiating with its international creditors. The move
could reduce the influence that Greek Finance Minister Yanis
Varoufakis has on the talks, which have been criticized for moving
too slowly. Euclid Tsakalotos, Greece's alternate foreign minister,
will head a new policy negotiating team, The Wall Street Journal
reported
(http://www.wsj.com/articles/greece-shuffles-team-negotiating-with-creditors-1430135685?KEYWORDS=greece).
European stocks in recent weeks have seen bouts of selling in
part on fears that Greece appears unlikely to reach a deal with
creditors and that it will leave the eurozone.
"The situation in Greece is continuing to drag on and people are
losing patience," said Jameel Ahmad, chief market analyst at FXTM,
adding that he believes Greece will be able to stay in the
eurozone.
"There is an argument that in the longer-term, the European
economy might be better without its weakest member. However, I
don't believe the euro would not be vulnerable to sudden losses if
Greece leaves [the eurozone]," Ahmad said. "Greece has the
potential to be the factor that sends the euro to parity," against
the greenback, he said.
The euro (EURUSD) has managed to push back above $1.09 against
the U.S. dollar, largely because of dollar-softness after
weaker-than-expected U.S. economic data.
For equities, the longer-term prospects "are looking very
bullish," Ahmad said. The ECB's asset-buying program is set to run
through September 2016, and "if it continues to have the desired
impact on economic data, then European stocks have the room to
continue moving higher."
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