Reuters News - European shares, euro gain as Greek fears ease

Credit: Reuters

LONDON | Mon May 28, 2012 3:15am EDT

(Reuters) - European stocks rose for a third consecutive session early on Monday and the euro bounced off two-year lows, as Greek opinion polls showing rising support for pro-bailout parties calmed speculation of a disorderly exit by Athens from the single currency.

Global share markets, commodities and the euro were all recovering from sharp falls last week, when investors fled to the safety of the U.S. dollar on mounting concerns about Greece, Spain's banking sector, and a lack of immediate policy responses from European leaders.

"Today it really comes down to what is going on in Greece, the idea that Greece will stay within the euro zone calms the market," said Ben Taylor, a trader at CMC markets.

The FTSE Eurofirst index of top European shares opened up 0.5 percent at 989.57 points after last week notching up its first weekly gain in a month.

The euro jumped 0.8 percent to $1.2615, pulling away from Friday's level of $1.2495, its lowest since July 2010.

Concerns over Spain were likely to weigh on investors after a government source said Madrid may issue more debt to recapitalize the country's fourth-largest lender, Bankia, increasing its funding challenge.

But trading volumes should remain muted on Monday, with U.S. markets closed for Memorial Day, while markets in a number of European countries, including Switzerland, were closed for a bank holiday. Monday is also a bank holiday in France and Germany, although their equity markets were open.

(Reporting by Richard Hubbard; Editing by David Holmes)