Stocks rose around the world amid optimism Greece can strike a deal with creditors, while the euro retreated on speculation a resolution would make it easier for US policy makers to raise interest rates. Chinese shares rebounded from the biggest weekly loss in seven years.
The Stoxx Europe 600 Index advanced 1% by 8:13 a.m. in London, while Standard & Poor’s 500 Index futures climbed 0.3%. The Shanghai Composite Index finished 2.2% higher after falling as much as 4.8%. The euro slid 0.6%. The yield on 10-year treasuries advanced, while rates on Italian and Spanish debt dropped. Copper and nickel added more than 1% in London, Bloomberg reported.
European leaders gave Greece 48 hours to reach an agreement that satisfies creditors. A package of proposals from Athens was a “certain step forward,” but didn’t go far enough, German Chancellor Angela Merkel said. A preliminary gauge of Chinese factory activity showed a smaller-than-estimated contraction, while a similar measure for France unexpectedly signaled expansion.
“Markets are rallying on optimism the debt deadlock on Greece will soon be resolved,” said Mixo Das, a strategist at Nomura Holdings Inc. in Singapore. “There’s bound to be further consolidation in Chinese equities as valuations are still high. With data starting to show some signs of improvement, there’s less pressure for the PBOC to ease monetary policy.”
The euro bought $1.1270, sliding against all its 16 major peers as Goldman Sachs Group Inc. said the European Central Bank’s quantitative-easing program will send it toward parity against the greenback.
EU Debt Rally
Higher-yielding European debt rallied a second day, with Italian 10-year bonds paying about 26 basis points less than similar-maturity treasuries. The yield on German notes due in a decade increased two basis points Tuesday.
The Bloomberg Dollar Spot Index added 0.3% as treasury rates climbed a second day, extending Monday’s 12 basis-point surge that was the biggest jump in six weeks. Ten-year treasuries yield 95 basis points more than the average for other Group-of-Seven countries.
Euro-area finance ministers will meet Wednesday to prepare the ground for a second, scheduled summit of European Union leaders to begin Thursday. European Commission President Jean-Claude Juncker said he is “convinced” a final agreement will be forged this week.
The Hang Seng China Enterprises Index, which also entered a correction last week, climbed 1.6% and the Hang Seng Index advanced 0.8%. Most sovereign bonds fell as the progress in Greek talks fueled demand for riskier assets. Japanese debt maturing in a decade yielded 0.455%, up three basis points.
Yields on Australian 10-year bonds jumped 11 basis points, or 0.11 percentage point, to 3.06%. Similar-maturity New Zealand notes climbed eight basis points to 3.71%, halting a seven-day retreat.
The S&P 500 rose as much as 0.9% to within a point of its May 21 record, before paring gains to end the day up 0.6%. The index is coming off its best week since April, climbing 0.8% after Federal Reserve Chair Janet Yellen signaled the central bank will take a gradual approach to raising US interest rates.
