Stock markets have raced ahead across Europe amid renewed hopes that a deal can be reached to save Greece from crashing out of the eurozone.

The Greek prime minister, Alexis Tsipras, has submitted proposals for a harsh new round of austerity measures totalling €13bn (£9.35bn) in an attempt to break the deadlock over its bailout and is now seeking the backing of parliament in Athens.

In the 13-page document sent to Greece’s creditors on Thursday night, he outlined plans for fierce cuts on protected privileges such as pensions, tax breaks for the country’s islands, and limits on military spending. In exchange, Greece wants a three-year €53.5bn loan deal to save the nation from bankruptcy and kickstart its wrecked economy.

The French CAC leapt by 2.4%, the German DAX gained 1.6%, and in London the FTSE 100 rose 70 points, or 1%, as traders welcomed signs of a breakthrough.

There was some caution, however, over the scale of the capitulation. Chris Weston of IG, said: “The Greek public voted against austerity last Sunday, yet what we have seen is a giant step closer towards the creditors’ prior proposal which was subsequently rejected, ironically by Tsipras.

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