Shares lifted by hopes of a Greece deal

 
Tim Wallace
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THE FTSE hit its highest level in almost six months yesterday, leading a rise in shares across Europe as hopes grew that negotiations to stop a Greek default may finally conclude.

Rumours of French and German proposals to cut bank capital requirements, enabling increased lending, also boosted European markets.

Though the talks suffered a setback last night, when finance ministers rebuffed an offer from Greece’s debt holders, the mood in the Eurozone was optimistic during the day.

Negotiations took a turn for the worse over the weekend after the authorities asked investors to accept new bonds yielding 3.5 per cent, rather than the previously agreed four per cent.

Greek finance minister Evangelos Venizelos had hoped talks would be complete by yesterday morning, and although that deadline was missed, said good progress was being made.

The hair-cut and swap must be arranged by mid-March if Greece is to avoid defaulting on debt repayments.

The FTSE 100 hit 5782.56, up 0.94 per cent in one day and 13.6 per cent in two months. Buoyed by bank capital reports, the STOXX Europe 600 Euro Zone Banking Index rose 3.9 per cent.

Yields on risky Italian 10-year bonds dropped 0.141 per cent yesterday to 6.107 per cent, down a full percentage point from levels earlier this month.

Greece also published a list of 4000 top tax evaders, in a bid to shame dodgers into paying up.