European stocks boosted by Greece bailout deal, gains for oil

European stocks inched up on Wednesday, hovering near a one-month high, as international creditors reached a deal to unlock more bailout funds for Greece, and as oil prices tried for $50 a barrel.

The Stoxx Europe 600 was up 1.1% at 347.77, moving toward its highest close since April 28, according to FactSet data. All sectors rose, led by the financial and oil and gas groups. The pan-European index was on track for a second consecutive gain, after Tuesday’s session closed up by 2.2%.

Greek deal: Greek bond prices pushed higher as Greece is now in line to receive 10.3 billion euros ($11.48 billion) in new loans, if a deal struck early Wednesday is signed off by the 19 member countries in the eurozone.

As bond prices rose, the yield on 1-year Greek bond fell 79 basis points to 6.82%, according to TradeWeb. The yield on 2-year debt lost 26 basis points to 6.82%. Greece’s Athex Composite rose 0.7% to 646.31.

The new payout comes after eurozone finance ministers and the International Monetary Fund agreed that Greece has made the necessary progress on reforms. The funding will help Athens from defaulting on large debt redemptions to the IMF and European Central Bank in July. The ministers also agreed on a potential road map on debt relief for Greece.

“Greece’s creditors reached a deal to avoid a summer car crash in a way that only they know how, involving extension of maturities, adjustment of interest rate payments with a good dose of things still to be decided, some of them after the German federal elections next year,” said Simon Smith, chief economist at FxPro, in a note.

“Still, for the single currency, this has removed one of the potential risks for the summer, with the deal unusually being reached comfortably ahead of the loan disbursement next month,” he said.

The euro was up 0.1% to $1.1153.

Oil: Energy shares were supported as oil prices crept toward $50 a barrel , with the move coming after industry data pointed to decreases in U.S. crude inventories. Official stockpile data will be released by the Energy Information Administration later Wednesday.

Among energy producers, Spain’s Repsol SA rose 2.4%, and Italy’s Eni SpA gained 1.6%. Oilfield services firm SBM Offshore NV picked up 0.4%.

Indexes: Germany’s DAX 30 gained 1.5% to 10,211.47, while France’s CAC 40 moved up 1.2% to 4,482.83. The U.K’s FTSE 100 added 0.7% to 6,264.33.

Italy’s FTSE MIB picked up 1% to 18,088.08, and Spain’s IBEX 35 advanced 1.9% to 9,086.80.

Movers: Marks & Spencer Group PLC shares dropped 8% as the apparel and food retailer said profit fell 19% and warned on margins.

Regus PLC shares bulked up 5.1% after RBC raised its rating on the outsourcing services company to outperform from sector perform.

Data: From Germany, the Ifo business-climate index rose to 107.7 in May, better than the 106.8 reading expected by economists survey by The Wall Street Journal.

Source: MarketWatch

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