European stocks rose today to halt a four-session drop as a rebound in commodities following a dismal two weeks prompted investors to scoop up recently hammered mining and oil shares.
But the rise was seen as a short-term technical bounce while simmering worries over a potential Greek debt restructuring and contagion to other euro zone debt-stricken countries weighed on peripheral benchmark indices.
Earlier this morning, the FTSEurofirst 300 index of top European shares was up 0.2 per cent at 1,128.80 points, while Spain's IBEX was down 0.2 percent and Portugal's PSI 20 down 0.5 per cent.
Greece is struggling to meet targets set in the €110 billion EU-IMF bailout that saved it from bankruptcy last year, and market players fear that a haircut on the country's debt - which would particularly hurt European banks - is becoming increasingly inevitable.
The IMF warned today that Greece's push to shore up its troubled finances would fail unless it sharply accelerated reforms, while the European Central Bank hit back at suggestions a debt restructuring might be the solution.
The euro struggled to hold on to gains against the US dollar and the cost of insuring Greek debt against default rose today amid mounting talk of a restructuring.
Mining and oil stocks rose along with commodity prices, with Xstrata up 1.6 per cent, BP up 1.2 per cent and Total up 1 per cent.
Despite today's rally, the STOXX basic resources index is down 11 per cent so far in 2011, making it Europe's worst sector year-to-date, while the broad STOXX 600 index is up 1 per cent over the same period, and the tech sector index is up 7 per cent, the best performing sector.
Around Europe, the FTSE 100 index in the United Kingdom was up 0.7 per cent, Germany's DAX index up 0.5 per cent, and France's CAC 40 up 0.6 per cent.
Reuters
