3:30 PM Frankfurt European markets traded higher as finance ministers gather to discuss the euro and the aide to Cyprus. G20 finance ministers are scheduled to meet in Moscow this weekend. Bond yields in Spain and Italy rose as political tensions mounted.
European markets traded higher as leaders in the region gather to discuss the rising euro and decide when to release the bailout to Cyprus. The International Monetary Fund Managing Director Christine Lagarde will attend the meeting as well.
G-20 finance ministers and central bank chiefs are scheduled to meet in Moscow February 15-16.
Italy is scheduled to elect the next premier at the end of next week and Cyprus is also set to finalize its presidential election.
European Central Bank Executive Board Member Joerg Asmussen told in an interview with the German daily Handelsblatt that the decision to aide Cyprus will be finalized by the end of March.
He stressed that a failure to rescue Cyprus will led the government to default on its financial obligations. If we allow a system-relevant country to fall, we risk the progress, according to a report by the paper.
Though small in size, Cyprus is the fifth nation in the euro zone to need a bailout and currency zone finance ministers are demanding higher transparency from the banks and asking the government to shrink its financial service industry.
Cyprus bailout is likely to exceed the size of its economy of 18 billion euros
Market indexes inched higher ahead of earnings this week from Barclays, Heineken NV and SA.
In London trading FTSE 100 index increased 20.3 or 0.3% to 6,284 and in Frankfurt the DAX index gained 4 or 0.1% to 7,656. In Paris, CAC 40 index gained 0.5% or 19.2 to 3,669.
The benchmark Italian bond yield rose after the presidential race tightened according to the latest polls conducted this weekend. Former Prime Minister Silvio Berlusconi narrowed the lead of front-runner Luigi Pier Bersani.
Investors were pricing the political risk in Italy and Spain and yields rose for the sixth day in the last nine days of trading.
10-year Italian bond yield rose 1.7% to 4.59% and equivalent Spanish government bond yield increased 4.8% to 5.43%.