European shares rebound

from missing its July debt payment and avoid short-term contagion risk to eurozone peripheral countries.
Banks, which have significant exposure to Greece and other eurozone peripherals, advanced, with the STOXX Europe 600 bank index up 0,8 percent. The banking index is down 5,8 percent this year.
Yet the rally could proved shortlived, with a confidence vote in the Greek parliament for Prime Minister George Papandreou due later in the day.
Failure to win the vote would put a 12 billion euros lifeline in doubt and raise near-term concerns about Athens’ ability to meet its debt payment next month.
Euro zone finance ministers said the Greek government, parliament and broader society had until July 3 to approve new steps in order to get the next instalment of 110 billion euros in EU and International Monetary Fund aid agreed in May 2010.
“The market is likely to lack true conviction. The Greek situation continues to cast a very long shadow over the market. All eyes are going to be on the political vote in Greece to see where that leads us,” said Keith Bowman, equity analyst at Hargreaves Lansdown.
Even if Papandreou survives, eurozone policymakers want the private sector to take part in a second bailout package, but Fitch Ratings warned it would treat a voluntary rollover of Greece’s sovereign bonds as default.
By 0809 GMT, Greece’s benchmark rose 1,4 percent and the FTSEurofirst 300 index of leading European shares was up 0,8 percent at 1 089,75 points, after falling 0,5 percent in the previous session to a three-month closing low. The pan-European benchmark is down 2,8 percent this year.
Oil and gas stocks rebounded 1,6 percent after a four-day losing run, with BP up 2,9 percent and Royal Dutch Shell up 1 percent.
“From a valuation perspective, the equity market is very attractive. In a more normal environment, we would clearly be at a ‘buy’ level,” said Marco Bruzzo, fund manager at Mirabaud Gestion AM, which has 10 billion Swiss francs (US$11,86 billion) under management.
“But on the short term, the market is reined in by the sovereign debt crisis, i.e. US economic slowdown and China’s inflation risks.” – Reuters.