European shares hit six week high after Greek bailout vote

With Greek parliament approval of vital third bailout, European shares gain momentum while euro loses value against dollar

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

European shares opened higher on Thursday after Greek lawmakers passed austerity measures to back a new multibillion-euro bailout program, which will help to keep Greece in the euro zone. 

Although some party members of the leftist Syriza government described the measures as “social genocide,” the package was approved with 229 votes of the 300-member Greek parliament. 

Greece will now have access to vital emergency liquidity assistance (ELA), re-open its banks-which have been closed since June 29 - and will be able to inject cash into its near empty coffers. 

Before the voting process began, Prime Minister Alexis Tsipras urged his MP’s to vote in favor of the measures in order to avert a financial collapse. 

In order to receive 86 billion euros ($94 billion) in funding, the debt burdened country accepted reforms on pensions adjustments, rise in value added taxes, amendments to its collective bargaining system and greater limits on public spending.

The pan-European FTSEurofirst 300 index rose 0.6 percent at 1,595.01 points by 0710 GMT after reaching 1,595.66, the highest level in more than six weeks. 

Meanwhile, the euro gained slight value on the parliament's vote but later plunged back, at one point, down to a six week low of $1.0912. 

Athens now heads towards another deadline on July 20, where an obligatory payment of 3.5 billion euros is expected to be paid to the European Central Bank (ECB). 

The european finance ministers will hold a conference call on Thursday morning to determine the basis for the 7 billion euro bridging fund which will allow Greece to make its upcoming payment.

Moreover, ECB president Mario Draghi will take stage at the central bank's regular policy meeting on Thursday followed by a news conference where his expected to discuss key issues.

TRTWorld and agencies