Greek reshuffle boosts markets

Greece's sovereign debt yields eased for a second straight session on Tuesday and banks crowded to the top of a rising stock market on sustained hope that a refreshed government negotiating team could breathe new life into talks with its creditors.

Investors continued to welcome news that the combative finance minister, Yanis Varoufakis, was sidelined from talks to release €7.2bn in bailout funds, without which Greece faces the prospect of running out of cash as early as mid-May. A loan repayment of €750m is due to the International Monetary Fund on May 12.

The discussions, which have been going on for three months, stalled as the Greek delegation resisted the reforms demanded by the creditors, raising the prospect of a potential debt default.

At last week's fraught talks between eurozone finance ministers in Riga, Slovenia's representative suggested if bailout talks did not progress more quickly the eurozone should prepare a "Plan B" to deal with a Greek default.

In the subsequent reshuffle of the Greek team, prime minister Alexis Tsipras removed Mr Varoufakis's handpicked representative to the negotiations, Nikos Theocarakis, and handed responsibility for co-ordinating the new team to a member of his own inner circle.

In early Tuesday trade, the yield on Greece's debt due on 2017 was again sharply lower - down 193 basis points to 21.94 per cent. Ten-year debt yields fell 55 basis points to 11.513 per cent.

"We may have to wait for a week or two for the deals to be thrashed out but at least the people in charge of the negotiation process are now experienced in these kinds of discussions," said Craig Erlam, senior market analyst at Oanda.

"This is the first real sign of compromise we've seen during these discussions which again suggests we're finally seeing progress being made."

The reaction also continued on the stock market. The Athens General bucked a trend for wider selling on wider European indices to rise 1.1 per cent to 803.82.

Its banks made further, notable gains. Shares in Bank of Piraeus, the country's biggest lender, were up 4.2 per cent. Alpha Bank gained 2.7 per cent and National Bank of Greece was 2.5 per cent higher.

The euro traded down 0.1 per cent at $1.0874.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation