Exchange traded funds following European stocks were set for a higher open in the U.S. on Thursday as leaders were able to calm nerves and reassure investors that Greece will remain part of the European Union.
Leaders in France and Germany have vowed to back Greece’s ongoing membership in the Eurozone, while Greek Prime Minister George Papandreou stated fiscal and structural reform would be achieved.
Vanguard European ETF (NYSEArca: VGK) rose 2.4% on Wednesday and was on track to open higher on Thursday.
“A slightly more positive tone came out of Europe,” James Buckley at Baring Asset Management told Bloomberg. “We’re still waiting for much more detail in terms of Greek debt and the extent of default that will be necessary and how banks will be recapitalized. We need much more detail on all this before we can really expect a more definite positive tone.”
“Markets are still speculating on Greece’s bankruptcy, although short-term the troika is expected to release funds for Greece,” said Benoit de Broissia at KBL Richelieu in an Associated Press report.
Papandreou spoke with French President Nicolas Sarkozy and German Chancellor Angela Merkel in a conference call Wednesday. France and Germany are interested in saving their own banks, as they are exposed to Greek debt, reported Steve Erlanger and Nicholas Kulish at the Financial Times.
“The recent measures adopted are a guarantee that the targets of the Greek program can be achieved,” the three leaders said in reference to announced property taxes and job cuts in Greece, reports the FT. [Germany ETF Leads Stocks Higher]
The iShares MSCI Germany Index (NYSEArca: EWG) and iShares MSCI France Index Fund (NYSEArca: EWQ) are among the single-country ETFs that have been hit hard by Europe’s debt crisis. [France ETFs Shakes Off Moody’s Bank Downgrade]
European markets were mostly shaking off reports that a rogue trader was responsible for about $2 billion in losses at Swiss bank UBS. The alleged rogue trader, Kweku Adoboli, is a director at UBS’s ETF desk within a unit called Delta1 Trading, WSJ.com reported, citing his LinkedIn profile.
Vanguard European ETF
Tisha Guerrero contributed to this article.