European shares climbed on Thursday after strong gains in the previous session, with the automobile sector rising on positive company updates and Greek shares surging on expectations that a debt deal will be sealed soon.
The STOXX Europe 600 Automobile and Auto Parts index rose 1 per cent, helped by a 1.3 per cent rise in Daimler after Chief Executive Dieter Zetsche said booming sales of high-margin sports utility vehicles would help it achieve a better result in the second quarter. BMW gained 1 per cent after unveiling a new flagship sedan.
Greek shares rose 5.6 per cent and its banking index surged 12 per cent, with German Chancellor Angela Merkel saying Greece had told its European partners that it was committed to intense discussions with its creditors to solve all open issues and avoid a looming default at the end of the month.
“The overall perception is that things might finally starting to move, with a deal now more likely in the days ahead than just a few days ago,” said Markus Huber, senior analyst at Peregrine & Black.
Cash-for-reforms deal
The global ratings agency Moody’s said there had been no significant contagion to the rest of the euro zone from Greece's difficulties in securing a new cash-for-reforms deal with its international creditors.
The talks have been deadlocked over Greece’s rejection of the creditors’ demands for cuts in pensions and unpopular labour market reforms as conditions for releasing frozen bailout funds. Greece will be in default at the end of June without fresh funds to let it to repay €1.6 billion to the IMF.
The pan-European FTSEurofirst 300 index was up 0.5 per cent at 1,557.22 points by 0818 GMT after surging 1.7 per cent in the previous session.
Across Europe, Germany’s DAX, France’s CAC and Italy’s FTSE MIB rose 0.5 to 0.8 per cent, while Britain’s FTSE was up 0.1 per cent.
Among individual movers, Britain’s Royal Mail fell 3.6 per cent after the government raised £750 million ($1.2 billion) by selling half of its 30 per cent stake in the company.
Vodafone dropped 3.1 per cent as its shares traded without the attraction of its latest dividend payouts.