Employees walk in the atrium of the Stock Exchange in Athens, Greece, yesterday. The Athex composite share price index plunged by 4.9% as the third largest Greek bank, Piraeus, signed an agreement yesterday to acquire all of the Greek deposits, loans and branches of the Bank of Cyprus, the Cyprus Popular Bank (CPB) and the Hellenic Bank, for a total cash consideration of €524mn (about $678mn).

AFP/London

 

European stock markets mostly rose yesterday and the euro recovered from four-month lows against the dollar as investors assessed the latest developments surrounding the Cyprus bailout saga and digested positive US data.

London’s FTSE 100 index of leading companies ended the day with a gain of 0.33% to 6,399.37 points.

In Frankfurt, the Dax 30 added 0.11% to 7,879.67 points, while in Paris the Cac 40 climbed 0.55% to 3,748.64 points.

Madrid lost 1.84% as the Spanish central bank forecast that the eurozone’s fourth biggest economy will contract even more this year than in 2012, but would then benefit from “a modest rebound in 2014.”

The Bank of Spain estimated that economic activity would shrink by 1.5% in 2013 and then expand by 0.6% in 2014.

In Athens, the Athex composite share price index plunged by 4.9% as the third largest Greek bank, Piraeus, signed an agreement yesterday to acquire all of the Greek deposits, loans and branches of the Bank of Cyprus, the Cyprus Popular Bank (CPB) and the Hellenic Bank, for a total cash consideration of €524mn (about $678mn).

“Equities have pushed on again during today’s session as traders responded to positive macro data from the States and priced in the likelihood of a successful resolution to the Cypriot banking saga,” said CMC Markets trader Toby Morris.

Chris Beauchamp, a market analyst at IG trading group, said “calm has finally descended after the turmoil of the Cyprus bailout, but the damage to investor confidence has been done.”

In foreign exchange deals yesterday, the euro was steady at $1.2852 from $1.2853 in New York late on Monday. The European single currency had hit a four-month low point at $1.2830 after the Dijsselbloem statements on Monday.

Gold prices dipped to $1,598 an ounce from $1,599.25 Monday on the London Bullion Market.

“The euro has remained under downward pressure following the announcement of the financial support package agreement for Cyprus with investors nervous that it could trigger capital flight from the eurozone in the near-term,” said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi.

“The heightened investor uncertainty in the near-term has created more risk-averse trading conditions supporting the yen,” he added.

US stocks moved higher after a leading index of housing prices showed a steep price increase.

The Dow Jones Industrial Average rose 0.52% to 14,523.50 points in midday trade.

The broad-based S&P 500 jumped 0.47% to 1,558.95 points, while the tech-rich Nasdaq Composite Index increased 0.21% to 3,242.02 points.

The gains came after S&P/Case-Shiller Home Price index showed average home prices rose 8.1% for 20 leading US cities for the 12 months ending in January 2013.

The rise was the highest year-over-year increase since summer 2006, said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.