* Euro recovers on Greece bailout plan hopes
* Borrowing costs for Greece and Spain ease
* Stocks gains, also supported by Fed comments, earnings
By Dominic Lau
LONDON, April 29 (Reuters) - The euro rebounded from a
one-year low on Thursday and Greece's borrowing costs eased on
reports that a planned aid package for Athens would be bigger
than initially thought.
Global equities advanced after two days of losses, also
boosted by the U.S. Federal Reserve's assurance that it would
keep interest rates low for an extended period, and robust
company earnings. Crude oil prices <CLc1> rose above $84 a
barrel.
The euro <EUR=> rose 0.3 percent to $1.3254, though pared
gains after EU Economic and Monetary Affairs Commissioner Olli
Rehn said the European Union should complete talks with Greece
"within days" but could not provide details.
Sources familiar with the talks said Greece is discussing a
salary squeeze and other new austerity measures with European
officials and the International Monetary Fund as a condition for
a three-year package. []
"The market sees a bigger package for Greece, covering three
years, as a bigger backstop. This is helping to address some
investor fears and giving some support for the euro," said
Kenneth Broux, market economist at Lloyds Banking Group.
"But in the bigger picture the euro remains under pressure
and I'd continue to sell rallies."
The single currency tumbled to a one-year low versus the
dollar of $1.3113 on Wednesday, knocked down after ratings
agency Standard & Poor's downgraded Spain by one-notch to AA.
Spain became the third euro periphery country to be
downgraded by this rating agency this week. Greece, which is
struggling under a pile of debt, and Portugal were downgraded on
Tuesday.
European Central Bank Governing Council member Axel Weber
said on Thursday there was no acceptable alternative to rescuing
Greece and urged quick approval of the aid package to prevent
market upheaval and contagion to other states. []
The premium investors demand to hold 10-year Greek
government bonds rather than euro zone benchmark German Bunds
narrowed to 750 basis points from 800 bps at Wednesday's
settlement close.
The premium for Spain's ten year bond's also eased to 116
bps, after rising to 127 bps earlier. The premium for Italian
bonds over Bunds was 123 bps, up from 118 bps on Wednesday's
close, though Italy's sale of 7.7 billion euros of debt drew
solid demand at relatively modest yields.
FED, EARNINGS, M&A HELPS
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> added 0.4 percent.
In Europe, the FTSEurofirst 300 <> index advanced 0.8
percent, while Greece's share benchmark <> rose 6.5 percent,
also helped by the country's securities regulator on Wednesday
banning short-selling.
U.S. stock index futures <SPc1> <DJc1> <NDc1> were up 0.4 to
0.5 percent, indicating a firmer start for Wall Street.
Sentiment was also boosted by the Fed maintaining the
"extended period" language and slightly upgrading some of their
economic forecasts, Hewlett-Packard's <HPQ.N> $1.2 billion deal
to buy Palm Inc <PALM.O> and relatively strong corporate
earnings.
Among the companies that reported strong quarterly figures,
consumer goods group Unilever <ULVR.L> beat forecasts with a
rise in underlying sales and ArcelorMittal <ISPA.AS>, the
world's largest steelmaker, forecast a sharp pick-up in the
second quarter due to higher demand and prices in all main
markets.
"There is pain caused by the fiscal situation in Europe, but
the underlying economic situation is firming up and if the news
flow is not absolutely negative, it will allow investors to
focus on the underlying trends," said Gilles Moec senior
European economist at Deutsche Bank.
(Additional reporting by Neal Armstrong, Naomi Tajitsu, Tamawa
Desai, Simon Falush and George Matlock in London)
