By George Georgiopoulos and Harry Papachristou

ATHENS |
Wed Feb 22, 2012 8:17pm EST

ATHENS (Reuters) – Trade unionists, communists and pensioners angry at punishing spending cuts in Greece marched through central Athens on Wednesday as lawmakers set to work on legislation needed to secure payment of a second bailout for the debt-laden country.

Ringed by riot police, parliament debated a string of measures demanded by euro zone states in exchange for a 130 billion euro rescue, endorsed by finance ministers on Tuesday after hours of torturous negotiation in Brussels.

The bailout averts a chaotic default next month, but does little to allay doubts over Greece’s long-term financial and social stability as the country faces spiraling unemployment and a recession in its fifth year.

“Those people in there are traitors,” said construction engineer Antonis Malkos, 55, pointing at the parliament.

“Greece is an independent country, not a protectorate. When the program crashes, and it will crash, the lenders will take away our national wealth,” he said.

The comments reflected unease among Greeks over the terms of the new rescue package — the second in less than two years — giving Greece’s European partners unprecedented rights to inspect national finances and make sure it sticks to the deal.

Dutch Finance Minister Jan Kees de Jager, most vocal among mistrustful northern creditors, kept up a barrage of skepticism.

“To be honest, I have doubts, but it’s the best we could do,” De Jager told French daily Le Monde when asked whether Greece could implement the new bailout program.

He called for a strengthening of the euro area’s financial firewalls around Greece, combining the current temporary rescue fund with a new permanent 500-billion-euro fund due to come into force in July – a move so far opposed by Germany.

Clutching umbrellas, several thousand demonstrators snaked through the central square, as others huddled in the rain in front of riot police guarding parliament against a possible repeat of riots 10 days ago.

Credit ratings agency Fitch downgraded Greece further ahead of a planned bond swap under which it will enforce sharp losses on private creditors as part of the bailout program.

It was the first of widely expected cuts from all rating agencies because Greece will pass into technical default on its liabilities once the transaction is completed, which Finance Minister Evangelos Venizelos said must take place by March 12.

“The exchange, if completed, would constitute a ‘distressed debt exchange’,” Fitch said, downgrading Greece to C from CCC.

When the bond swap is done the sovereign rating will drop further to ‘restricted default’ and then will be re-rated again “at a level consistent with the agency’s assessment of its post-default structure and credit profile,” the agency said.

Under terms agreed on Tuesday, private holders of some 200 billion euros of Greek bonds will take a loss of 53.5 percent in the face value of their holdings to ease Athens’ debt burden.

WORK TO DO

Laws to enact the debt swap passed the parliamentary committee stage on Wednesday and are set to be adopted in plenary session on Thursday. Venizelos told the Economic Affairs Committee that the debt swap offer must be made by Friday.

The legislation requires that investors have at least 10 days to consider the transaction and creates so-called “collective action clauses” (CACs) forcing all bondholders to proceed with the transaction once it has won a specified level of approval.

According to the draft law, the swap will go ahead once a 50 percent quorum of bondholders have responded to the offer and the CACs will be activated once a two-thirds majority of that quorum have voted in favor of the swap.

The debt swap is a vital part of a plan to cut Greece’s liabilities from 160 percent of gross domestic product to 120.5 percent by 2020, according to the terms of the Brussels deal.

With a 14.5-billion-euro debt repayment due on March 20, caretaker Prime Minister Lucas Papademos told a late-night cabinet meeting on Tuesday to make sure all components of the rescue package were in place by elections slated for April.

He predicted stable growth in 2014 and 2015.

The conservative New Democracy (ND) partner in the current coalition with the PASOK socialists is pushing hardest for early elections but senior PASOK officials are less enthusiastic about a vote in which their party faces decimation.

“It would be good if the government of Lucas Papademos had more time. People must feel that something is changing,” PASOK Environment Minister George Papaconstantinou told Germany’s Die Zeit newspaper.

The ND can pull the rug from the coalition when it wants, and party sources told Reuters they could agree to elections on April 29 if necessary to complete the bond swap.

The austerity measures have triggered unrest, most recently on February 12 when hooded youths torched and looted buildings across central Athens as lawmakers backed more than 3 billion euros in cuts to wages, jobs and pensions.

Greeks are bracing for a decade of hardship. Doctors and medical workers have called a 24-hour strike for Thursday.

DOUBTS REMAIN

The complex deal reached on Tuesday buys time to stabilize the 17-nation currency bloc and strengthen its financial protection against a Greek default, but it leaves doubts about Greece’s ability to avoid difficulties in the longer term.

“The Greek deal is a sham. It’s designed to make everybody feel better,” U.S. investor Jim Rogers told Reuters Insider TV. “This Greece deal is only designed to get us through the French election and the American election and the German election.”

Market sentiment on Greece is still nervous, as evidenced by a bond auction at which Germany, regarded as Europe’s safe haven, sold 4.3 billion euros of new two-year paper despite an ultra-low coupon of 0.25 percent.

A draft enabling law for new budget cuts introduced into parliament on Tuesday showed that Greece now sees a budget deficit of 6.7 percent of gross domestic product, up from an original target of 5.4 percent in its initial 2012 budget.

The new figure retroactively reflected a more pessimistic view of the economy that already emerged last year as Greece and its lenders set to work on the bailout package.

Besides sending permanent foreign inspectors, the bailout plan requires Greece to set aside revenue to cover debt service into a special reserved account.

The plan reflects the mistrust between Greece and foreign lenders – in particular EU paymaster Germany – after years of backsliding by Athens, but it has riled Greeks whose sense of national pride has been hurt by the threat of bankruptcy.

Government coalition lawmakers in Berlin said Chancellor Angela Merkel may struggle to win a parliamentary vote next week’s on Greece’s bailout without the humiliation of having to rely on left-wing opposition support.

“I will vote ‘no’ whatever happens because this is purely about delaying an insolvency,” Klaus-Peter Willsch of Merkel’s Christian Democrats (CDU) told Reuters.

($1 = 0.7539 euros)

(Additional reporting by Daniel Flynn in Paris, Axel Threlfall in London, Gareth Jones and Brian Rohan in Berlin; Writing by Mark John and Matt Robinson, Editing by Rosalind Russell)

http://www.reuters.com/article/2012/02/23/us-greece-idUSTRE8120HI20120223

News in Greece
gogreece

The bailout has saved Europe, for now, but it’s unlikely to save Greece.

The euro130 billion ($172 billion) rescue — agreed to Tuesday after an all-night summit of European ministers — prevented an uncontrolled bankrupcty and calmed investors worried that a Greek default would have started a chain reaction across Europe. But it left key problems unresolved.

Draconian budget cuts could keep Greece mired in recession after five straight years. The deal doesn’t directly address the debt problems in other struggling countries in the 17-country zone that uses the euro. Spending cuts could reduce tax revenue and possibly worsen the government’s finances.

“You can’t shrink your way out of a recession,” said Mark Weisbrot, co-director of the liberal Center for Economic and Policy Research in Washington. “What they are doing to Greece really makes no economic sense.”

In Athens, Greeks reacted with a mixture of relief and fear of a dark future.

“I don’t see it with any joy because again we’re being burdened with loans, loans, loans, with no end in sight,” architect Valia Rokou said in the Greek capital.

Finance Minister Evangelos Venizelos said the agreement managed to prevent imminent catastrophe: “we avoided the nightmare scenario,” he said.

The agreement was the second massive bailout of Greece following a euro110 billion ($146 billion) rescue in 2010 that didn’t return the country to solvency. It will give Greece euro130 billion in loans through 2014 from other eurozone governments and the International Monetary Fund. It was secured after Greece agreed to painful and humiliating measures, including thousands of layoffs of civil service workers and cuts to the minimum wage, imposed by countries suspicious of Greece’s reform efforts after two years of what they called the country’s broken promises.

The finance ministers wrangled until the early morning over the details of the rescue, squeezing last-minute concessions out of private holders of Greek debt who agreed to lose 53.5 percent of the face value of their investment to avoid even more severe losses if Greece fails to pay euro14.5 billion in debt due March 20.

The serious risks of the bailout’s failure include the likelihood that Greece’s economy remains in a deep recession instead of returning to growth in 2013 as the deal assumes. That would undermine chances of paying even the reduced debt load, estimated at a still-high 120 percent of annual economic output in 2020, down from 160 percent now.

Additionally, political outrage over the cutbacks could lead Greece politicians to balk at the tough conditions. That could push rescuer countries — led by Germany — to cut off further funding.

Elections in Greece are expected in April. The leaders of the two main parties have committed to the cuts and reform program, but anti-bailout parties have been gaining in the polls.

Greece’s economy shrank 7 percent in the fourth quarter of last year and unemployment is 19 percent, a consequence of cuts in public wages and increased taxes inflicted during a downturn.

If that keeps up, even the rescuers acknowledge the reduction goal of 120 percent of GDP is long gone.

“The risks are clearly on the downside,” said Diego Iscaro, an economist at IHS Global Insight. “By austerity alone, Greece will not solve the problems it has at the moment. We don’t know when the economy will return to growth and how it will grow.”

http://abcnews.go.com/Business/wireStory/greece-secures-bailout-avoid-debt-default-15755497

News in Greece
gogreece

By Yves Logghe, AP

Greek Finance Minister Evangelos Venizelos, left, addresse European Central Bank President Mario Draghi on Monday.

http://www.usatoday.com/money/world/story/2012-02-20/Greece-bailout/53183092/1

News in Greece
gogreece

New Delhi: The Eurozone leaders will be meeting on Monday to take a final decision on the second bailout package for Greece. This as the Greek Prime Minister gets ready to introduce the widely unpopular austerity budget in Parliament; the budget will cut wages and pensions, and reform health care to get the $170 billion bailout.

Greece is already under a debt of $145 billion that was granted for the first bailout plan in 2010.

Diplomats and economists do not expect the package to resolve Greece’s economic problems: that could take up to a decade or more.

But they hope agreement on Monday will help restructure the country’s vast debts, put it on a more stable financial footing and keep it inside the single currency zone.

Senior officials from euro zone finance ministries and the European Central Bank held a conference call on Sunday to go over the final details of the 130-billion-euro programme, including a debt sustainability analysis critical to the IMF.

While there is still scepticism in some countries that Greece will be able to live up to its commitments – including implementing 3.3 billion euros of spending cuts and tax increases – officials said momentum was behind approving the deal and that that line was likely to prevail on Monday.

“At the moment it appears it will go exactly this way,” Austria’s finance minister, Maria Fekter, said on Sunday when asked in a TV interview if the package would be approved.

“I don’t think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money.”

A euro zone official in contact with junior ministers involved in the conference call on Sunday said that while there were still gaps to be filled in some of the numbers, they were not so large that they risked derailing the agreement.

“I don’t see anybody wanting to be responsible for pulling the plug on the deal at this late stage,” he said.

“The gut feeling is that this is going to go through – everyone feels the pressure this time to deliver,” he said, indicating that the Netherlands, Finland and Germany, who have been the most critical of Athens’ ability to commit, looked likely to come on board if the financing gaps could be closed.

Debt sustainable?

Under the deal, Greece will have around 100 billion euros of its obligations written off via a debt restructuring involving private-sector holders of Greek government bonds.

The private sector – mostly banks and insurance companies – will swap bonds they hold for longer-dated Greek securities that pay a lower coupon, resulting in a real 70 per cent reduction in the value of the assets.

The bond exchange is expected to launch on March 8 and complete three days later, Greece said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.

The vast majority of the funds in the 130-billion-euro programme will be used to finance the bond swap and to ensure that Greece’s banking system remains stable: 30 billion euros will go to “sweeteners” to get the private sector to sign up to the swap, and 23 billion will go to recapitalise Greek banks.

A further 35 billion will allow Greece to finance the buying back of the bonds, and 5.7 billion will go to paying off the interest accrued on the bonds being traded in.

The overall objective is to reduce Greece’s debts from 160 per cent of GDP to around 120 per cent by 2020 – the figure and timeframe that the IMF, ECB and the European Commission, together known as the troika, have established as sustainable.

The focus of discussion in Sunday’s conference call – and the issue expected to dominate the finance ministers’ meeting on Monday – is what “around 120 per cent” means in practice.

A debt sustainability report delivered to euro zone finance ministers last week showed that under the main scenario, Greek debt will only fall to 129 per cent by 2020, and that’s if Greece runs a primary surplus next year, one official said.

A number of measures, including restructuring the accrued interest portion or reducing the “sweeteners”, are being considered to move the 129 figure closer to 120, a euro zone official familiar with the negotiations said.

As well as working to get the number down, there are moves to convince members of the troika that a debt level of 123-125 per cent in 2020 would still be sustainable.

“If we can get it down to 123 or 124 per cent, I think everyone’s going to be okay with that,” the euro zone official following the Sunday conference call said. “Everyone will find a way to tweak the numbers.”

There are also discussions about marginally lowering the interest rate on 110 billion euros of bilateral loans already made to Greece in May 2010 – the first package of support – to lighten the financing burden on Athens.

“We are far away from the objective,” Luxembourg’s Jean-Claude Juncker, who will chair Monday’s finance ministers’ meeting, said on Friday, referring to the 120 figure.

“All the discussions I will have… until Sunday night will try to move the figure nearer to the target.”

Longer-term problems

If the finance ministers do succeed in reaching an agreement on Monday, it will provide immediate relief to Athens and financial markets, which have been kept guessing since the bailout package was announced last October.

But no one is pretending that it will be the end of problems for Greece. Figures last week showed that Greek gross domestic product contracted an annualised 7 per cent in the last quarter of 2011, much more than expected.

If the country is to be put on a long-term sustainable path, it needs to return to growth rapidly. But the structural and labour market reforms so far introduced have done little to improve that prospect and unemployment is rising rapidly.

The troika, which is responsible for monitoring Greece’s reform progress, carries out quarterly reviews, while the European Commission will soon have dozens more monitors on the ground in Athens as part of the second package.

Already there is concern that at the first review of the new programme – if it is approved on Monday – Greece will be found to be behind, especially if GDP continues to slump.

That will again raise the threat of the country having to default if it cannot meet its obligations, and invite questions about its ability to remain in the euro zone.

And even Greece can meet its targets, there will still be concerns about Portugal, Spain and Italy, none of which is out of the woods yet.

With additional information from Reuters

http://ibnlive.in.com/news/greece-primed-for-second-bailout-package/231778-2.html

News in Greece
gogreece

February 18, 2012 9:42 pm

By Kerin Hope in Athens

http://www.ft.com/cms/s/0/edade934-5a77-11e1-a52b-00144feabdc0.html

News in Greece
gogreece

By Chuck Mikolajczak

NEW YORK |
Fri Feb 17, 2012 4:46pm EST

NEW YORK (Reuters) – U.S. stocks edged higher on Friday, but investors stayed cautious before a long holiday weekend when hopes are set for Greece’s bailout plan to be approved.

The SP ended its sixth positive week out of seven so far in 2012, lifting it near levels not seen in more than three years. The index has risen 8.2 percent so far this year.

Friday’s modest advance has pushed the benchmark index up nearly 24 percent from its October low. European shares ended the week higher ahead of the deal, with the FTSEurofirst 300 .FTEU3 index up 0.6 percent. .EU

Euro-zone finance ministers will meet to approve a 130 billion euro rescue package for Greece on Monday when the U.S. market will be closed for the Presidents Day holiday.

“The fact the European market is up the Friday before, knowing the U.S. market is off on Monday, is really a sign that the Greece situation is priced into the market,” said Andrew Slimmon, managing director of Global Investment Solutions at Morgan Stanley Smith Barney in Chicago.

Analysts were wary of a pullback after Thursday’s strong gains pushed the SP to its highest since May 2 and viewed the market’s resilience as constructive.

“It is encouraging that we obviously had some breakouts yesterday on the indexes and we are not giving anything back,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.

Technicians see the market at a short-term top, with the SP at nine-month highs and within 10 points of hitting its highest level since 2008.

The Dow Jones industrial average .DJI gained 45.56 points, or 0.35 percent, to 12,949.64. The Standard Poor’s 500 Index .SPX added 3.17 points, or 0.23 percent, to 1,361.21. The Nasdaq Composite Index .IXIC dropped 8.07 points, or 0.27 percent, to 2,951.78.

For the week, the Dow rose 1.2 percent, the SP gained 1.4 percent and the Nasdaq advanced 1.7 percent.

Equity markets have tended to react positively on progress toward helping Greece avert a disorderly default, but past agreements have broken down at the last minute.

Wall Street stocks also typically pause near the end of earnings season as the market digests the results. According to Thomson Reuters data, 404 of the SP 500 companies have reported results through Friday, with 64 percent beating expectations.

The Nasdaq underperformed the overall market, dragged lower by a 14.3 percent decline in shares of Gilead Sciences (GILD.O) to $47. The drop came after some patients treated with its experimental hepatitis C drug relapsed.

HJ Heinz (HNZ.N) rose 4.5 percent to $54.47 and Campbell Soup (CPB.N) gained 2.6 percent to $32.90 after both food makers posted better-than-expected quarterly profits.

In contrast General Mills (GIS.N) lost 3.6 percent to $38.34 after it lowered its outlook.

Data showed U.S. gasoline prices jumped 0.9 percent in January, pushing overall consumer prices up and offering a reminder of the risks energy costs pose to the economic recovery.

Volume was modest with about 6.5 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 6.98 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,695 to 1,261, while on the Nasdaq, advancers beat decliners 1,266 to 1,235.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)

http://www.reuters.com/article/2012/02/17/us-markets-stocks-idUSTRE80T0J120120217

News in Greece
gogreece

By Chikako Mogi

TOKYO |
Thu Feb 16, 2012 7:28pm EST

TOKYO (Reuters) – Asian shares rebounded on Friday, as sentiment turned positive on firmer signs euro zone officials would soon approve a long-awaited bailout for Greece to reduce the risk of a disorderly default, while solid U.S. economic data also lent support.

MSCI’s broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, after falling 1.5 percent on Thursday when euro zone officials were reported to be examining ways of delaying part or even all of the second bailout programme, raising fears about a Greek default.

Japan’s Nikkei .N225 opened up 1.4 percent, rising to a six-month high. .T

The euro clung to overnight gains on Friday at $1.3124, off a three-week trough of $1.2974 hit on Thursday. Against the yen, it eased to 103.45 yen from a two-month high of 103.82 yen hit on Thursday. FRX/

“Greece is less likely to deliver a scare to markets, which already seem to be pricing quite a negative scenario,” said Barclays Capital in a note, but added that it was difficult to envisage a quick resolution given rising implementation risks amid domestic political pressures building ahead of elections.

“(Markets) have become more optimistic about the U.S., so a ‘growth scare’ there could upset market sentiment,” it said.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Bank funding strains: link.reuters.com/rer25s

Euro zone crisis in graphics: r.reuters.com/hyb65p

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Euro zone officials said on Thursday they are putting the finishing touches to a second bailout deal for Greece for approval on Monday, with the focus on how Greece can prioritize debt repayment and ways to ensure Athens commits to reforms. Sources also said euro zone central banks had agreed on a Greek bond swap.

A spokesman for the Greek government said on Thursday that Greece expects to begin a debt swap scheme with private bondholders.

That would substantially reduce the risk of Athens missing the March 20 deadline to pay a 14.5 billion euro bond redemption payment.

The Standard Poor’s 500 Index .SPX rose to 1,358.05 on Thursday, a nine-month high, boosted by solid U.S. data that underlined a recovery trend in the world’s largest economy.

U.S. jobless claims unexpectedly fell last week to a near four-year low, January housing starts came in better than forecast, and the pace of factory activity in the U.S. Mid-Atlantic region gained momentum in February.

U.S. crude steadied around $102.33 a barrel on Friday, after ending at a six-week closing high of $102.31 the day before. Brent settled on Thursday at $120.11 a barrel, the highest settlement since mid-June, on worries about supply from Iran and the North Sea, where output was expected to dip next month.

Asian credit markets firmed with rising risk appetite, narrowing the spreads on the iTraxx Asia ex-Japan investment grade index by 6 basis points early on Friday.

Receding investor fears, or risk aversion, was reflected in the CBOE Volatility index VIX .VIX, which measures expected volatility in the SP 500 index .SPX over the next 30 days. The index plunged about 9 percent on Thursday, its biggest drop since December 9, sharply reversing an 8 percent jump on Wednesday.

But signs of strains were not completely wiped out yet.

Given that there was still potential for a messy Greek default, tentative signs of stress in the European interbank lending market are emerging despite hefty amounts of cash floating around in the euro banking system.

The Markit iTraxx index of credit default spreads for European senior financials, measuring the cost of insuring against a bank defaulting on its debts, has risen by almost 50 basis points in the past 10 days to above 240 bps.

(Editing by Richard Pullin)

http://www.reuters.com/article/2012/02/17/us-markets-global-idUSTRE8181RD20120217

News in Greece
gogreece

By Dina Kyriakidou and Lefteris Papadimas

ATHENS |
Wed Feb 15, 2012 6:18pm EST

ATHENS (Reuters) – Greece expressed hope it can secure its second EU/IMF bailout in as many years and a deal on easing its debt burden next week, but its euro zone peers made clear the months of increasingly ill-tempered argument are not quite over yet.

Finance Minister Evangelos Venizelos said the Greek side had met the final two demands set by the European Union and IMF to seal the 130 billion-euro rescue, which Athens needs to avoid a chaotic default when big debt repayments fall due in March.

But a government official in Germany, which has got involved in testy exchanges with Athens over its will to tackle its problems, said the Greek side still had questions to answer.

Greece pinned its hopes on a meeting of euro zone finance ministers on Monday, after talks in Athens and at the euro zone level failed to produce a deal to avert a Greek bankruptcy which could shake financial markets around the globe.

Venizelos told reporters late on Wednesday the cabinet had decided how to plug a 325 million-euro gap in the 3.3 billion euros of extra budget savings this year which the EU and IMF are demanding.

And he noted that the leaders of both parties in the government of Prime Minister Lucas Papademos had given written undertakings to implement the austerity measures, which provoked a night of fighting, arson and looting in Athens on Sunday.

Exasperated euro zone finance ministers in the Eurogroup had demanded both steps be taken before making a final decision on the bailout.

MISTRUST OF ATHENS

With mistrust of Athens running high, EU sources told Reuters that euro zone officials had considered whether it was possible to delay part or all of the rescue deal while still avoiding a disorderly default.

Greece needs the funds to avoid bankruptcy when 14.5 billion euros of debt repayments fall due on March 20.

“The big issue of the 325 million euros has been finalised and this helped the discussion,” Venizelos said following a lengthy telephone conference call with his euro zone peers.

The Eurogroup had been due to meet in Brussels on Wednesday but its Chairman Jean-Claude Juncker scaled this down to a teleconference, complaining that Greek political leaders had failed to provide written commitments or plug the savings gap.

Greek party leaders have a reputation for working right up to deadlines, or beyond them, raising tensions with the Eurogroup which fears that they will avoid implementing the austerity package in full after elections expected in April.

However, conservative leader Antonis Samaras, the front runner to become the next prime minister, provided his written undertaking to the EU and IMF on Wednesday shortly before the Eurogroup conference call. Socialist leader George Papandreou wrote a similar letter.

Venizelos said he hoped euro zone officials could tie up all the issues before the ministerial Eurogroup meets on Monday, opening the way for a bond swap deal with Greece’s private creditors, known as PSI, which will reduce its debt mountain.

“These issues will be prepared at a Euro Working Group meeting on Sunday in Brussels so that, with good faith, the final decision for the approval of the (bailout) programme is taken and the public announcement of the PSI is made on Monday,” he told reporters.

Greece had said it must initiate a debt swap deal with private sector bondholders by Friday to meet the March 20 debt deadline. It was hoping to win the euro zone’s backing for its second bailout this week. If that backing now comes on Monday, it is possible the debt swap could start mid-next week.

OPEN MATTERS

After the three-hour conference call among the 17 euro zone ministers, Juncker issued a statement saying progress had been made, but provided few details. However, he made clear some matters remained open on making sure the bailout plan is carried out in full.

“Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of programme implementation and to ensure that priority is given to debt servicing,” he said.

One government official in Germany, where public opinion is hostile to bailing out Greece, was cautious.

“Questions remain that are very important to Germany and other member states about the sustainability of the programme,” said the official, who declined to be named.

German Finance Minister Wolfgang Schaeuble appeared to question whether Greece would stand by the austerity package after the elections.

“When you look at the internal political discussions in Greece and the opinion polls, then you have to ask who will really guarantee after the elections … that Greece will stand by what we are now agreeing with Greece,” he told SWR2 radio.

Greek President Karolos Papoulias, who holds a largely ceremonial role, fought back, saying: “Who is Mr Schaeuble to insult Greece?”

(Additional reporting by Dina Kyriakidou and Karolina Tagaris in Athens, Luke Baker in Brussels and Gernot Heller in Berlin; writing by David Stamp; editing by Andrew Roche)

http://www.reuters.com/article/2012/02/15/us-greece-idUSTRE8120HI20120215

News in Greece
gogreece

Enlarge image

Enlarge image

Finance ministers canceled a Brussels meeting slated for
today and will hold a teleconference instead to prod Greece to
do more to clinch an aid package worth 130 billion euros ($170
billion) along with about 100 billion euros of debt relief from
private bondholders. Greece needs the aid to make a 14.5
billion-euro bond payment on March 20.

“The decision was the result of an evaluation by the head
of the eurogroup, Jean-Claude Juncker, that there weren’t
sufficient elements of consensus to be sure that a meeting would
be successful,” Italian Prime Minister Mario Monti said late
yesterday on Sky Italy Television.

After Juncker cancelled the gathering, citing the lack of
political assurances from Greek leaders to stick to austerity
pledges, a government official in Athens said the leaders of
Greece’s two biggest political parties, New Democracy’s Antonis Samaras and Pasok’s George Papandreou, will today provide the
written commitments demanded.

The euro erased a loss of as much as 0.8 percent on the
news of the Greek politicians’ pending promises. The currency
traded at $1.3129 at 5:55 p.m. in New York.

Meantime, evidence mounted that the euro’s guardians have
made progress ring-fencing Greece’s woes. Italy yesterday sold 6
billion euros of bonds at lower borrowing costs as investors
shrugged off a downgrade of its credit rating by Moody’s
Investors Service.

Speaking on ZDF television, German Finance Minister Wolfgang Schaeuble said Feb. 13 that if efforts to prop up Greece come to
naught, “we’re better prepared than two years ago.”

Finance Minister Jan Kees de Jager of the Netherlands, one
of four AAA rated states left in the euro area, pushed back
against suggestions from Athens that the aid bill will be 15
billion euros higher than planned.

Greece’s prospects hinged on Prime Minister Lucas Papademos’s Cabinet finding 325 million euros of the extra
budget cuts demanded by European governments and the
International Monetary Fund as conditions for fresh loans.

Greece has depleted its credibility by missing targets for
deficit reduction, economic reforms and asset sales that were
set when it obtained a 110 billion-euro aid package in May 2010.

As a result, the once-taboo notion of a departure or
expulsion from the euro zone has crept into the mainstream
political debate.

“If they don’t do this, they exclude themselves from the
euro zone and the impact on the other countries now would be
less important than maybe a year ago,” Luxembourg Finance
Minister Luc Frieden said at the Atlantic Council in Washington
this week.

Also unclear was whether the European Central Bank, buyer
of 219.5 billion euros of weaker countries’ bonds in the past
two years, would contribute to debt relief in the new package.

The central bank probably spent about 47 billion euros to
buy Greek bonds with a face value of 60 billion euros, yielding
potential profits of 13 billion euros, according to Juergen Michels, chief European economist at Citigroup in London.

“Policy makers are still scrambling, and markets have
gotten used to it, but there is still a general feeling that the
Greece situation will not have a happy ending regardless of what
they agree to,” said Jay Mueller , who manages about $3 billion
of bonds at Wells Fargo (WFC) Capital Management in Milwaukee.

• LinkedIn
• Google +1
• Print

• QUEUE

By Rodrigo Campos

NEW YORK |
Mon Feb 13, 2012 7:35pm EST

NEW YORK (Reuters) – Stocks rose on Monday, led by bank shares after Greece’s parliament approved reforms needed to qualify for a cash disbursement and avoid an unruly default.

Greek lawmakers backed drastic cuts in wages, pensions and jobs on Sunday as the price of a 130 billion euro ($170 billion) bailout by the European Union and International Monetary Fund.

But unrest in the streets and a voting rebellion by lawmakers of the ruling coalition suggested Greece may be on the brink of massive social unrest, which would make it difficult for Athens to stick to the rescue terms.

The SP 500 last week hit a 7-month high, in part on bets the Greek reforms would pass. The benchmark index traded near the 1,355 level, seen as a resistance point and possible trigger for a pullback.

“Although we’re up, we still haven’t eclipsed the highs we did last week in some of the indexes,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. “It is a sign there was some more enthusiasm on the prospect (of the Greek deal) than on the news.”

The SP 500 is up more than 25 percent from a low in early October. McCain said he is worried that the recent market rally may have outpaced the economic improvement.

“You have to respect the fact the market has been as strong as it has been, but we wouldn’t buy into this strength,” he said.

The Dow Jones industrial average .DJI rose 82.27 points, or 0.64 percent, to 12,883.50. The SP 500 Index .SPX gained 10.12 points, or 0.75 percent, to 1,352.76. The Nasdaq Composite .IXIC added 28.80 points, or 0.99 percent, to 2,932.68.

Financial stocks .GSPF, up more than 1 percent, were among the best performers on the SP 500, and bank shares led gains in Europe. A gauge of European banking stocks .SX7P gained 0.5 percent, and an index of Greek banks .FTATBNK surged 12.3 percent.

On Wall Street, Bank of America (BAC.N) climbed 2.7 percent to $8.29 and is up almost 50 percent this year. Bank shares continue to outperform after having posted deep losses in 2011.

Apple Inc (AAPL.O) raised the stakes in an intensifying global patent battle with Samsung Electronics (005930.KS) by targeting Samsung’s latest model using Google Inc’s (GOOG.O) fast-growing Android software.

Apple shares rose 1.5 percent to $500.95 after reaching a record of $503.83, while Google rose 1.2 percent to $613.26.

Google is expected to win approval from European regulators, as well as from U.S. antitrust authorities, for its planned $12.5 billion purchase of Motorola Mobility (MMI.N), according to people familiar with the matter.

Regeneron Pharmaceuticals Inc (REGN.O) jumped 13 percent to $115.37 after the company significantly raised its 2012 sales forecast for a key eye drug.

As earnings season moves into its final stages, 51 companies in the SP 500 are scheduled to report results this week. According to Thomson Reuters data through Monday, of the 357 companies in the benchmark index that have released results, 64 percent have beaten analyst expectations.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

http://www.reuters.com/article/2012/02/14/us-markets-stocks-idUSTRE80T0J120120214

News in Greece
gogreece