World stocks rose for the third straight day and oil prices jumped on Wednesday after Greece’s parliament approved the first of two austerity measures designed to prevent the country from going bankrupt.
Safe-haven assets lost some of their appeal, with gold paring gains, as Greek Prime Minister George Papandreou won a key battle to ensure the disbursement of a 12 billion euro tranche from a bailout program the country needs to avoid default next month.
“We’ve had the issue on the table for some period of time now, and as resolution is reached, it will give the market confidence,” said David Levy, portfolio manager at Kenjol Capital Management in Austin, Texas.
Greece’s government must now win approval on Thursday for legislation detailing specific implementation measures for the 28 billion euro austerity package. But Wednesday’s vote clears a major hurdle in its bid to win access to international funding to avoid default.
The MSCI All-Country World Index .MIWD00000PUS climbed 1.26 percent in its third session of gains. In Europe, the FTSEurofirst 300 index .FTEU3of top shares jumped 1.56 percent.
Major Wall Street indexes were higher on the Greek austerity plan approval and a mildly encouraging report on pending U.S. home sales.
Pending home sales rose a stronger-than-expected 8.2 percent in May, but a glut of unsold properties remained a drag on the housing market. The latest data followed a mildly encouraging housing report on Tuesday. [ID:nN1E75R1XG]
Equities have rallied on optimism the Greece program would pass, with the S&P up more than 2 percent so far this week.
The Dow Jones industrial average .DJI was up 69.74 points, or 0.57 percent, at 12,258.43. The Standard & Poor’s 500 Index .SPX was up 10.29 points, or 0.79 percent, at 1,306.96. The Nasdaq Composite Index.IXIC was up 12.91 points, or 0.47 percent, at 2,742.22.
U.S. crude oil jumped more than $2.33 at $95.19 a barrel as the Greek parliament vote eased fears that a possible Greek default would derail the global economic recovery and after industry data showed big draws in U.S. crude and gasoline stocks.
At midday in New York the euro was up against the dollar EUR= on expectations the second Greek vote will pass on Thursday. It trades at $1.4427, near the session peak of $1.4447.
U.S. Treasuries continued their sell-off into a third day. Benchmark 10-year Treasury notes were trading 17/32 lower in price and yielding 3.09 percent, up from 3.04 percent at Tuesday’s close. The 30-year Treasury bond edged up 1/32 in price for a yield of 4.32 percent, down from 4.33 percent late on Tuesday.
Traders were also setting up for a $29 billion auction of seven-year notes set for 1 p.m. (1700 GMT). It was the third of three auctions this week, with new coupon issuance totaling $99 billion.
Spot gold XAU= traded at an intraday high of $1,512.31 an ounce, countering losses earlier in the week that took the price below $1,500, while COMEX gold GCcv1 rose 0.83 percent to $1,5012.5.
Gold usually gains in periods of greater investor aversion, but the Greek debt crisis and its impact on the euro have caused bullion to act less as a safe-haven asset and more as a commodity.
Afer the Greek vote, the spread between Greek government debt and German benchmark Bunds GR10YT=TWEBDE10YT=TWEB narrowed 9.5 basis points to 13.614 from 13.709 percent on Tuesday.
