Stock markets rise after Greek parliament approves measures to secure bailout

TORONTO - The Toronto stock market was higher Monday, reflecting relief that the Greek parliament passed a package of harsh austerity measures that will hopefully be a step towards saving the country from bankruptcy.

The S&P/TSX composite index was ahead 55.8 points to 12,445.21 while the TSX Venture Exchange added 5.64 points to 1,659.19.

The Canadian dollar headed higher as Sunday's vote encouraged investors to take on added risk, rising 0.45 of a cent to 100.17 cents US.

U.S. markets were also higher as the Dow Jones industrial average gained 57.9 points to 12,859.13.

The Nasdaq composite index climbed 22.72 points to 2,926.6 and the S&P 500 index was up 7.55 points to 1,350.19.

Greece's fellow eurozone members had demanded drastic cuts in civil service jobs, minimum wages and welfare to secure the €130 billion bailout package.

Without the bailout, and a related bond swap deal with private creditors, Greece will be pushed into a disorderly default on bond repayments next month. That would see cause the country’s financial sector to collapse, fuelling further social unrest and destabilizing the wider European and global markets.

Between now and the looming Greek bond repayment on March 20, there is also the risk that some private creditors may resist the deal to swap their bonds for new ones with a lower value.

However, on Monday a spokeswoman for Germany’s finance ministry said the final approval of a new bailout won't be given until early March. That means the eurozone will have to split the final bailout approval from a related debt relief deal that will take several weeks to implement and which has to be finalized ahead of the March 20 bond repayment.

Marianne Kothe said that the other euro countries will first want to see how many of Greece’s private creditors participate in the bond swap which designed to cut Greece’s debt by €100 billion.

Relief over the Greek austerity vote extended to commodity markets where oil and metals advanced, also supported by the weaker U.S. dollar.

A weaker greenback usually helps support commodity prices, which are denominated in dollars, as it makes oil and metals less expensive for holders of other currencies.

March copper gained two cents to US$3.88 a pound, pushing the base metals sector up 0.7 per cent. HudBay Minerals (TSX:HBM.TO - News) was ahead 13 cents to $11.99 and Teck Resources (TSX:TCK-B.TO - News) improved by 22 cents to $40.46.

The industrials sector was ahead 0.53 per cent. Bombardier Aerospace (TSX:BBD-B.TO - News) has received an order for five Q400 NextGen aircraft from an unnamed carrier valued at US$160 million. Bombardier shares rose six cents to $4.85.

Financials were also supportive, particularly in the insurance component. Manulife Financial (TSX:MFC.TO - News) rose 16 cents to $11.91 and Sun Life Financial (TSX:SLF.TO - News) climbed 19 cents to $21.04.

The gold sector was slightly weaker as April bullion gave up early gains and lost $5.10 to US$1,720.20 an ounce. Kinross Gold Corp. (TSX:K) declined six cents to $10.73.

Avion Gold Corp. (TSX:AVR.TO - News) has started production at its new underground mine at the Tabakoto gold deposit in Mali, West Africa, with average production anticipated to be about 470,000 tonnes of ore for the year. Its shares were up five cents to $1.53.

European markets posted solid advances following the Greek vote with London's FTSE 100 index ahead 0.95 per cent, the Paris CAC 40 was up 0.67 per cent and Frankfurt's DAX rose 0.46 per cent.

Asian markets advanced amid data showing that the country’s economy shrank 2.3 per cent in the fourth quarter as manufacturers were battered by the strong yen, weak export demand amid the European debt crisis and flooding in Thailand.

Japan’s Nikkei 225 index rose 0.6 per cent, Hong Kong’s Hang Seng gained 0.5 per cent and South Korea’s Kospi added 0.6 per cent to 2,005.74.

In mainland China, the benchmark Shanghai Composite Index ended virtually unchanged while the Shenzhen Composite Index gained one per cent.

Elsewhere on the corporate front, London-based Vodafone Group PLC, the world’s largest mobile phone company, said Monday it is considering a possible bid for Cable & Wireless Worldwide PLC. Vodafone said it was "in the very early stages of evaluating the merits of a potential offer for CWW."

The Sunday Times suggested that Vodafone might offer 700 million pounds for Cable & Wireless, which had a market value of nearly 550 million pounds based on Friday’s closing price.