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Shares rise as Greek PM U-Turns Referendum Plan

A dramatic volte-face by the Greek PM, George Papandreou on his bailout referendum, helped send markets back up on Thursday, providing hope that last week’s Euro salvage plan could now be resurrected. Following a late night meeting the previous evening, Papandreou was sticking by his guns to press ahead with his controversial offer to his own voters. Overnight China announced it would be impossible to even think about committing to a European Financial Stability Fund (EFSF) expansion under the current climate, whilst the IMF and EU suspended the €8 billion of aid Greece had been expecting later this month to meet just its short term needs.

Back home and from abroad, the political pressure was building on Mr Papandreou, rumours surfaced mid morning that he was about to resign, and as yet that has not happened. However, as more members of his party resigned or defected, he regained his sanity and was forced in to reversing his decision during the afternoon.

Naturally the European markets performed best, the CAC 40 and DAX both posting rises of 2.7%, as the FTSE 100 index gained 1.1% by the close, to end the session 61.5 points higher at 5545.6. In the US the main indices were rallying ahead by around 1.5% at Europe’s close.

Elsewhere there was more good news. Weekly US jobless claims were better than expected and better late than never the ECB cut base rates in Europe. This was a move that many had demanded for the last few months, but recently departed ECB head Jean-Claude Trichet had stubbornly refused to action such a cut. Many commentators had suggested his refusal to do so was more to do with reputational defence rather than being in Europe’s economic interests, having increased rates too often and too soon earlier this year. New chief Mario Draghi had no such regard for Trichet’s legacy, cutting rates by 0.25% to 1.25% after just two and a half days in to his role.

At a stock level, shares in ITV jumped 6% to 65.1p, after a broker upgrade ahead of next week’s results, whilst those of Tate & Lyle had a good day also following first half results. The sugar refiner and diversified ingredient supplier reported pre-tax profit of £180 million, 10% higher than most market estimates and representing 38% growth over the same period last year.

This was posted in Bdaily's Members' News section by John Dance .