FTSE 100 rallies as Greece approves austerity bill

Posted on 13 Feb 2012 by Tim Brown

Britain’s top share index was boosted today following the Greek approval of the austerity bill which will ensure a bailout aimed at prevent the country defaulting on its debts.

According to Reuters, the index rose 59.16 points, or 1% to 5,911.55 by 1228 GMT. Banks added 1.5% after Greeks voted through the bill which will mean €3.3bn ($4.35 billion) of extra budget cuts for this year alone and provides for a bond swap to ease Greece’s debt burden by cutting private-sector investors’ bond holdings by some 70%.

It is hoped the Greek bill will be enough to convince the European Union and the International Monetary Fund to release funds that will help Greece rollover debt due in March.

German Foreign Minister Guido Westerwelle has described the measures as “a first significant step along the right road”.

“However, the actual difficult work with implementing the reforms that have been agreed on is only just starting now. That is the decisive precondition for Germany and the other euro partners being able to stand by Greece with a further rescue package,” he said.

The index has gained some 14% since November and volumes on Monday reflected investors’ fragile confidence and doubts that the upside has much further to go, with the FTSE 100 trading just 30 percent of its 90-day average by midday.

Following on from the news, the Greek government has confirmed there will be general elections in April. Could be more trouble ahead. Cabinet reshuffle also planned by Greek PM Lucas Papademos.