European shares rise to six-week high

European shares climbed to a six-week high on Thursday after the Greek parliament passed austerity measures demanded by its lenders to open talks on a new bailout package to keep Greece in the euro. The region's stock markets also hit session highs after the European Central Bank (ECB) pressed ahead with its economic stimulus programme, agreed more funding for Greek banks, and promised further action if necessary.
Greek banks and the Athens stock exchange have been shut for the last few weeks as part of capital control measures, but Greek banks were set to re-open next week as Europe moved to restart funding to the stricken Greek economy. The funding boost came hours after a fractious Athens parliament approved a tough bailout programme in a vote that left the government without a majority and looking to new elections within months.
Nevertheless, investors welcomed the fact that the measures had made it through the Greek parliament in the first place. The pan-European FTSEurofirst 300 index rose 1.4 percent to 1,608.71 points, its highest level in more than six weeks. The FTSEurofirst is up nearly 20 percent in 2015. The euro zone's bluechip Euro STOXX 50 index also advanced 1.5 percent, as did Germany's DAX.
"The Greek vote has helped the market post early gains. Over the next few weeks, we see the focus shifting to the results season where we expect the newsflow to be supportive," Robert Parkes, director of equity strategy at HSBC Bank, said. Swedish stocks were among the best performers in Europe after a number of companies published quarterly earnings. Swedish engineer Alfa Laval surged 12.5 percent after a bigger than expected rise in earnings. Atlas Copco also jumped around 10 percent after the compressor and mining gear maker forecast higher demand.
Some analysts said stocks could come under pressure in the coming weeks because much concerning Greece's debt problems remains unresolved, and from speculation about the timing of the first US interest rise in eight years. Federal Reserve Chair Janet Yellen said on Wednesday that the US central bank was on track to raise rates this year. Higher interest rates can hit stocks as they typically boost investment returns on bonds and cash. "Buy the rumour, sell the news," Koen De Leus, senior economist at KBC in Brussels, said. "The stock market may be heading for more calm waters in the coming weeks, but investors' focus will gradually shift to the timing of the first rate hike in the United States after 6 years of a zero interest rate policy."