BLBG: Stocks, Euro, Commodities Pare Gains After Greek Austerity Plan Is Passed
The euro, stocks and commodities pared advances after the Greek parliament approved austerity measures needed to win European bailout funds, as investors speculated the vote failed to justify this week’s gains.
Europe’s common currency slipped to $1.4386 at 9:31 a.m. in New York from about $1.4423 before voting began in Greece. The euro was up 0.1 percent from yesterday. The MSCI All-Country World Index of shares in 45 nations trimmed its advance to 0.9 percent from 1 percent, and the Standard & Poor’s 500 Index added 0.4 percent after futures expiring in September climbed as much as 0.7 percent. The S&P GSCI Index of 24 commodities pared its increase to 0.8 percent from 1.5 percent.
“On the one hand, the austerity package might prevent default and that’s good, but I believe some of the social unrest is contributing to the paring of gains,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4 billion. “The protest and the riots are creating an emotional reaction from investors.”
Greek Prime Minister George Papandreou clinched enough votes to pass the first part of a plan aimed at meeting European Union aid requirements and staving off default. This week before the vote, more than 20,000 protestors fought police in Athens. After gaining 155 votes in the 300-seat Parliament, Papandreou is on track to secure a bill setting out the strategy for a 78 billion euro ($112 billion) package of budget cuts and asset sales that is the condition for further rescue funds.
Attention now shifts to the vote on a second bill tomorrow that authorizes implementation of the measures.
Government bonds issued by Greece extended gains. The yield on the two-year note tumbled 199 basis points to 26.56 percent, with the 10-year yield sliding 17 basis points to 16.29 percent.
To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
