ECONOMY

Investors should be reassured by Greek bailout talks, EU says

Investors should take confidence from signals that the Greek government is planning to request an extension to its country’s bailout loan agreement, European Commission Vice President Valdis Dombrovskis said.

“Markets should be reassured that there is agreement being prepared between Greece” and the rest of the euro area, Dombrovskis told reporters in Brussels on Wednesday.

The commission, the EU’s executive arm, is “now working and looking if there is a possibility to find common ground toward this extension of the current program,” Dombrovskis said.

An extension is important because “this allows potentially to unlock the funds which are available for Greece under the program, and secondly allows more time for negotiation” over what sort of support Greece may receive in the future, he said.

Greek Prime Minister Alexis Tsipras’s government may request a six-month extension of its loan agreement, a person familiar with the matter said Tuesday. The request is likely to come on Thursday, a Greek government official, who spoke on condition of anonymity said Wednesday.

The euro area has refused to yield to Tsipras’s demands to radically alter the terms of the bailout agreement. Greece has so far declined to ask for an extension of the current deal, which sees aid given in return for economic reforms and fiscal prudence.

Greece has been at odds with the rest of the 19-nation euro area over how to formulate an extension of the country’s 240 billion-euro ($273 billion) bailout beyond its end-February expiry. Talks among euro-zone finance ministers collapsed on Monday without reaching a deal.

European stocks rose to a seven-year high amid investor speculation that Greece will reach a compromise agreement on its bailout terms with euro-area creditors. The Stoxx Europe 600 Index rose to 379.33 at 3:32 p.m. in Brussels.

[Bloomberg]