By Tommy Stubbington
Greek financial markets steadied Thursday following their sharp
postelection slump, with battered bank stocks rallying sharply.
Athens's main stock index climbed 1.7% as relative calm returned
after Wednesday's 9.2% decline, which came as investors took fright
at the new Syriza-led government.
Shares in Alpha Bank AE and Eurobank Ergasias SA, which fell
sharply on Wednesday amid concern that depositors are moving their
money out of the country, rebounded.
Gains for the battered banks came despite data from the European
Central Bank showing that private-sector deposits at Greek banks
fell EUR4.6 billion in December to EUR173.2 billion, the biggest
monthly drop since April 2013.
The broader stock market's move higher also came despite
Standard & Poor's Ratings Services downgrading its outlook for
Greece's credit rating after Wednesday's close.
The move "reflects our view that some of the economic and
budgetary policies advocated by the newly elected Greek government,
led by the left-wing Syriza party, are incompatible with the policy
framework agreed between the previous government and official
creditors," S&P said in a statement.
That fueled a further spike in government bond yields early on
Thursday, suggesting investors are growing increasingly concerned
about the possibility of default. But short-term bonds erased those
losses to trade flat on the day while longer-term bonds gained.
Greece's 10-year yield fell slightly to 10.3%. Yields fall as
prices rise.
Any spillover into wider European markets remained muted,
although stocks were weighed down in early trade by a selloff in
the oil and gas sector, after Royal Dutch Shell's profit fell short
of expectations. The Stoxx Europe 600 picked up from early lows to
trade little-changed early in the afternoon.
European shares have outperformed their U.S. peers since the
European Central Bank last week announced it will embark on a
bond-buying stimulus program.
A preference for European equities over U.S. markets is becoming
more popular "but we don't think it's becoming consensus
positioning wise yet, " said Deutsche Bank strategist Jim Reid.
The ECB's bond-buying program has buoyed bonds across the
eurozone and helped insulate the rest of the currency area from the
turmoil in Greece. Italian and Spanish bonds have weakened only
modestly.
German bonds, considered the eurozone's safest, remained in high
demand Thursday, with the 30-year bond yield falling below 1% for
the first time.
Write to Tommy Stubbington at tommy.stubbington@wsj.com
Access Investor Kit for Alpha Bank SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GRS015013006
Access Investor Kit for Eurobank Ergasias SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GRS323003004
Access Investor Kit for Alpha Bank SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US02071M1018
Access Investor Kit for Eurobank Ergasias SA
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US26844B2097