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Markets absorb Greece's bond market return

By Pan Pylas

Associated Press

Published: Thursday, April 10 2014 2:12 p.m. MDT

An employee of the Stock Exchange opens the door next to a display showing stock price movements in Athens, Wednesday, April 9, 2014. Greece confirmed Wednesday that it is returning to international bond markets for the first time in four years amid growing signs of confidence in the country that triggered the European debt crisis.

Thanassis Stavrakis, Associated Press

Enlarge photo»

LONDON — Markets in Europe traded in fairly narrow ranges Thursday as the successful return of Greece to bond markets following a four-year absence helped further steady the nerves following a turbulent start to the week.

Greece, the country at the forefront of Europe's debt crisis over the past few years, has managed to sell 3 billion euros ($4.1 billion) of five-year debt at a yield below 5 percent. To put that in context, the rate Greece has had to pay is around half that which Russia has to pay for the equivalent debt and comes even though the country has yet to emerge from a savage recession and remains lumbered by a debt burden of around 175 percent of gross domestic product.

"Overall, this debt sale is a triumph in financial terms," said Kathleen Brooks, research director at Forex.com.

Brooks credited the success to a number of factors, including the so-called "Merkel Guarantee," a reference to the pledge made by German Chancellor Angela Merkel during the financial crisis to keep Greece from exiting the euro bloc.

Risks remain for Greece, notably on the political front. But even there, analysts noted signs that the vast majority of people in the country want to stay within the 18-country eurozone.

"Considering everything Greece has been through one could argue that it is surprising that there hasn't been more of an anti-European stance taken by the people," said Gary Jenkins, an analyst at LNG Capital.

One sign of the confidence in the Greece's economic prospects has been the sharp rally in Greek shares over the past few months alongside the slide in the interest rates on the country's openly-traded debt. Following the debt sale, the main stock market in Athens, the Athex, was down 0.2 percent at 1,290.

Reduced concerns over Greece and the future of the eurozone have also helped shore up the euro itself, which is trading near multi-year highs at $1.3865.

Elsewhere in Europe, the FTSE 100 index of leading British shares was up 0.1 percent at 6,642 while Germany's DAX fell 0.2 percent to 9,492. The CAC-40 in France was 0.2 percent lower at 4,433.

Wall Street was poised for a flat opening following two days of solid gains — Dow futures and the broader S&P 500 futures were down 0.2 percent.

There's been a calmer backdrop in markets over the past couple of days after a Nasdaq-inspired retreat started at the end of last week. Aluminum company Alcoa kicked off the quarterly corporate earnings season Tuesday with a solid set of numbers, helping to ease concerns across financial markets.

Earlier in Asia, markets in Hong Kong and Shanghai rose sharply on plans to link the bourses that would widen access to China for foreign investors. Hong Kong's Hang Seng gained 1.5 percent to close at 23,186.96 and the Shanghai Composite added 1.4 percent to end at 2,134.30.

Most other Asian benchmarks finished with modest gains. Tokyo's Nikkei 225 stock average ended unchanged at 14,300.12 while South Korea's Kospi rose 0.5 percent to 2,008.61. Australia's S&P/ASX 200 climbed 0.3 percent to 5,480.80.

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