Greece shares surge as ECB hikes emergency liquidity limit for Greek banks

Greece's ATX surged over 4 per cent in intraday trade on Tuesday after European Central Bank increased its funding lifeline to Greece's banks again, allowing the country's banks to stay open as Athens inches towards a deal with creditors.

Meanwhile, other European markets were trading flat. France's CAC40 was up 1 per cent, Germany's DAX was up 1 per cent and FTSE100 was up 0.3 per cent.

On Monday, the CAC 40 in Paris jumped 3.81 percent to close at 4,998.61 points while Frankfurt's DAX 30 also gained 3.81 percent to stand to 11,460.50 points. The Milan stock exchange won 3.46 percent, Madrid climbed 3.87 percent and the Athens Composite Index rocketed 9.0 percent. London's benchmark FTSE 100 index rose 1.72 percent to end the day at 6,825.67 points.

The latest increase amounted to "a bit less than one billion euros," one of the people told Reuters. This raises the value of the ECB's Emergency Liquidity Assistance (ELA) programme to around 89 billion euros ($100 billion).

"This is following the positive signal from the leaders' summit meeting," the person said. Two further sources confirmed that the limit had been increased.
The move, which is the third day in a row that the ECB has sanctioned additional funding, follows Athens' presentation on Monday of new budget proposals that euro zone leaders welcomed as the basis for possible agreement.

However, Greek lawmakers reacted angrily on Tuesday, with parliament's deputy speaker saying the government's proposals would struggle to win approval from the legislature.

With nervous Greek savers and firms withdrawing billions of euros in cash from their accounts, the country's banks are almost entirely dependant on central bank funding to avoid collapse and potentially dragging down the country with them.

The latest increase in ELA provides some breathing space as Greece's Prime Minister Alexis Tsipras seeks to clinch a formal deal with euro zone backers.
If a concrete agreement is reached and there is a euro zone commitment to provide more funding, the ECB could also loosen restrictions that limit Greece's ability to sell and fund itself with short-term debt.

Greece offered economic reforms in exchange for the last payment of 7.2 billion euros from the current aid programme.

Without that money, Greece may not be able to make a 1.5-billion-euro repayment to the IMF due on June 30, risking a default and possible chaotic exit from the eurozone.

After an emergency summit in Brussels, eurozone leaders had ordered their finance ministers to hold fresh talks on Wednesday to thrash out the details ahead of a full meeting of all 28 European Union leaders on Thursday.

(With inputs from Agencies)