LONDON: Greek bond yields hit a session low and shares extended gains on Thursday after the ECB approved more emergency funding to Greek banks, buoying demand from investors already betting on a positive outcome to debt deal talks.
Even though Athens' leftist government failed to come to an agreement with its international creditors overnight, a copy of draft proposals spoke of "extending" its bailout agreement as a "bridge" to a new package.
Finance ministers in the Eurogroup will meet again on Monday to seek a compromise. Meanwhile, the European Central Bank extended the amount of emergency liquidity assistance for Greek banks by 5 billion euros, on top of the 60 billion euros previously approved.
The ECB's Governing Council earlier held a short-notice teleconference to discuss how long it could continue to keep Greek banks afloat. "It would appear that the Greeks are playing quite a good hand of poker," Hantec Markets analyst, Richard Perry, said, referring to the new bank funding from the ECB.
By 1520 GMT, Greek three-year yields were 270 basis points (bps) down at a day's low of 18.36 percent, while 10-year yields were down 60 bps at 10.36 percent. Athens' benchmark ATG equity index was up 6.7 percent, with shares of top Greek banks such as Alpha Bank and Piraeus Bank up about 15 and 10 percent, respectively.
"We are continuing to take a glass-half-full view of these negotiations," Rabobank strategists wrote in a note, "although we do acknowledge that the path to resolution and dissolution remains worryingly the same."
Greek Prime Minister Alexis Tsipras will lay out his case for more financial help to fellow EU leaders in Brussels on Thursday.
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