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Markets relieved by Greek ditching of referendum

By Pan Pylas

Associated Press

Published: Friday, Nov. 4 2011 6:40 a.m. MDT

LONDON — Markets edged higher Friday on relief that Greece will not hold a referendum on its latest rescue deal, which would have endangered Europe's crisis-fighting efforts, and as investors prepared for key U.S. jobs data.

The calm state of markets represents a huge contrast to the wild swings earlier this week, when George Papandreou on Monday stunned everyone by calling the referendum. His plan stoked investor fears of a disorderly Greek debt default and the country's possible exit from the eurozone.

Pressure from France and Germany, and an apparent concession from Greece's main opposition party to back the elements of last week's €130 billion ($179 billion) rescue deal, saw Papandreou shelve the referendum pledge on Thursday.

That drove markets higher, with momentum carrying into Friday, though uncertainties over Greece remain — Papandreou's government faces a confidence vote in Parliament later in the day.

"The situation in Greece continues to act as a backdrop to markets though there does seem a greater semblance of calm ahead of tonight's key confidence vote in the Greek parliament, which Papandreou could well lose, given the events of the last 48 hours," said Michael Hewson, market analyst at CMC Markets.

In Europe, the FTSE 100 index of leading British shares was up 0.9 percent at 5,599 while Germany's DAX rose 0.2 percent to 6,146. The CAC-40 in France was 0.5 percent higher at 3,211.

Wall Street was poised for a solid opening — Dow futures were up 0.1 percent at 11,989 while the broader Standard & Poor's 500 futures rose by the same rate to 1,257.

How the U.S. actually opens could hinge on monthly payrolls data later, which often set the market tone a week or two after their release. The consensus in the markets is that the U.S. economy added 100,000 jobs last month, just enough to keep up with population growth and stop the already high unemployment rate from rising from 9 percent.

"Last month's data was encouragingly strong, so another good set of numbers should put more life back into markets," said Chris Beauchamp, market analyst at IG Index.

Investors will also be keeping a close watch on developments in Cannes, France where the leaders of the Group of 20 economies will discuss ways to boost the firepower of the International Monetary Fund, the institution that was set up as the lender of last resort for struggling governments after World War II.

With their own finances already stretched from bailing out Greece, Ireland and Portugal — and traditional allies like the United States wrestling with their own problems — eurozone countries are looking to the IMF to use its resources and rescue experience to help prevent the debt crisis from spreading to large economies like Italy and Spain

Earlier in Asia, stocks ended a four-day losing streak following Thursday's recovery in Europe and the U.S. Japan's Nikkei 225 index rose 1.9 percent to close at 8,801.40. Hong Kong's Hang Seng jumped 3.1 percent to 19,842.79. South Korea's Kospi gained 3.1 percent to 1,928.41.

Mainland Chinese shares tracked advances in the region, with the benchmark Shanghai Composite Index adding 0.8 percent to 2,528.29 while the Shenzhen Composite Index gained 0.6 percent to 1,071.34. Benchmarks in Australia, Singapore, Taiwan, India, Indonesia and Thailand also rose.

The calmer tone in stock markets was evident elsewhere too with the euro up 0.1 percent at $1.3840 and the dollar flat at 78.06 yen.

Oil prices tracked equities higher— benchmark crude for December delivery was up 77 cents at $94.84 in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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