June 1, 2011
New hopes that European nations will reach a deal to avert a Greek debt default pushed global financial markets to a buoyant finish for the month of May.
Bonds of Greece and other peripheral European nations rose, as did the euro and stock markets across the region.
In the U.S., the Dow Jones Industrial Average gained 128.21 points, or 1%, to 12569.79, as the prospects for an interim solution to Greece's debt troubles enabled investors to overlook disappointing economic news. While the gain was the Dow's biggest since April 20, the blue-chip index ended May with its worst monthly performance since last August.
Tuesday's gains were largely driven by news Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid for Greece. That would delay any restructuring of Greek debt, a crucial step for financial markets worrying that such a move may come as soon as next month, potentially spreading contagion to other debt-laden countries such as Portugal, Ireland and Spain.
But analysts cautioned that an agreement would merely put off what is a near-certainty: that Greece will default on its debt, causing losses for investors. And an agreement on helping Greece is far from assured.
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