Markets unmoved by Greek debt success

FTSE takes Greek debt deal and Chinese inflation drop in its stride, with all eyes on this afternoon's US jobs figures.

European stock markets were unmoved by a steep decline in Chinese inflation and news that Greece has secured a debt deal, opening flat after having already baked the news in.

Asian and US markets moved higher overnight, but on Friday morning London?s FTSE 100 was flat at 5,856. In Europe the German Dax was 0.3% higher and the FTSEurofirst 300 was up 0.1%. After yesterday?s gains, the euro dropped by 0.4% against the dollar to $1.32.

Of FTSE 100 movers, several miners fell after broker downgrades. Silver miner Fresnillo (FRES.L) languished at the bottom, down 67p or 3.67% to ?17.57, after being cut from buy to hold by Deutsche Bank. Kazakhmys (KAZ.L) dropped 17.5p or 1.8% to 948p after Canaccord cut its price target.?

Greek deal

Early this morning, and after long negotiations, Greece?s government confirmed that holders of ?172 billion of its bonds, from a total of ?206 billion, had agreed to participate in its debt exchange, which means it avoids an immediate and messy default.

Edging closer to the biggest sovereign restructuring in history, the government said that 85.8% of holders of its bonds issued under Greek law, and 69% of holders of its bonds issued under non-Greek law, chose to take part.

However, it will issue ?collective action clauses? to force the remaining holders of Greek-law bonds into the swap, taking total participation to 95.7%. This move could trigger a ?credit event?, with an industry panel due to meet today to decide whether this is the case.

?With the support of our official sector and private creditors, Greece will continue implementing the measures needed to achieve the fiscal adjustments and structural reforms to which it has committed, and that will return Greece to a path of sustainable growth,? said Evangelos Venizelos, Greek minister of finance in a statement.

Josef Ackermann, chief executive of Deutsche Bank and a lead negotiator for private sector bond holders, said: ?These are important steps towards resolving the Greek debt crisis, addressing the overall fiscal and sovereign debt problems in the Euro area, and restoring financial stability, which is essential to foster economic growth and job creation.'

Eurozone finance ministers are expected to hold a call this afternoon to discuss how to proceed, with formal meetings to follow next week. The result should clear the way for Greece to receive the ?130 billion bailout package agreed last month.

China boost

China?s consumer prices inflation eased off much more than expected in February on an annual basis, dropping to 3.2%.

The figure, as well as other numbers indicating that the economy is cooling, have added to hopes that the Chinese authorities will continue to take measures to stimulate the economy ? moves that would likely boost markets around the world.

?Beijing will continue its policy easing which was started in mid-Oct, though we should not expect a big-bang stimulus,? commented Lu Ting of Bank of America Merrill Lynch after the release of today?s data.

US economy hopes

The real market mover today could be the release of US jobs figures, the much anticipated non-farm payrolls.

Market-watchers are optimistic that the data could again prove to be upbeat, with the unemployment rate staying at 8.3% while payrolls are hoped to increase by perhaps 210,000.

?Anything is possible. But if it is ever possible to read the tealeaves on this unpredictable release, they are looking quite auspicious this month,? said Rob Carnell of ING.

Source: http://www.fxstreet.com/fundamental/analysis-reports/markets-unmoved-by-greek-debt-success/2012-03-09.html

tony bennett