Greek Bailout Hopes Shore Up Markets (Update2)

Updated from 11:19 a.m. EST with closing European stock market levels.

By Pan Pylas

LONDON -- Markets rose on Monday on hopes that Greece will finally secure a massive but long-delayed international bailout, allowing the debt-crippled country to avoid defaulting on its debts next month.

A surprise easing in monetary policy in China over the weekend also added to the buoyant mood in markets -- many stock indices are trading at multimonth highs, while the euro has recovered its poise.

The main focus of attention -- on a day when Wall Street is shut for a public holiday -- will be Brussels, where the finance ministers from the 17 eurozone countries are gathering to discuss the elusive Greek bailout deal.

After some eurozone countries suggested last week that they might prefer Greece to default, the latest comments indicate the ministers will approve the 130 billion euro ($171 billion) bailout. Greece has struggled to convince its partners in the eurozone, particularly Germany, that it will enact the austerity and reform measures in return for the cash.

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As the finance ministers arrived for the meeting, which may last until well into the night, they appeared ready to back the deal.

"I am of the opinion that today we have to deliver, because we don't have any more time," Jean-Claude Juncker, the prime minister of Luxembourg who also chairs the meetings of eurozone finance ministers, said as he arrived in Brussels.

Alongside the bailout, Greece is expected to conclude debt-reduction discussions with its private creditors. That should slice off around 100 billion euros ($133 billion) from Greece's debt mountain. Even after that, Greece will have the highest debt burden of all the euro countries.

One of the last-minute hurdles to overcome is how to get Greece's debt burden down to around 120% of GDP by 2020. One way that target could be met is if European central banks forgo profits due on their holdings of Greek debt.

Even though there are issues that need to be ironed out, investors are confident of a successful conclusion.

"Although we can all be allowed a degree of skepticism regarding an imminent solution to the Greek bailout, investors still seem happy to look for excuses to buy, and stock markets still seem to have plenty of momentum, even considering how far they have come in recent months," said David Jones, chief market strategist at IG Index.