Greek concerns ease, US leading index rises

Concerns over Greek sovereign debt eased slightly on Friday. Reuters reports:

Greece's embattled prime minister sacrificed his finance minister on Friday to force through an unpopular austerity plan and avert bankruptcy, while EU powers Germany and France promised to go on funding Athens.

After a week of political turmoil and violent protests in Athens, Prime Minister George Papandreou put his main socialist rival into the finance ministry in a bid to unite his fractious party behind spending cuts, tax rises and privatizations crucial to securing further IMF/EU assistance.

In Berlin, the leaders of Germany and France, long at odds over how to involve private holders of Greek bonds in a new rescue package for Athens, said they agreed on a mild solution favored by Paris and the European Central Bank.

But European leaders cannot afford to be complacent as Friday also brought a reminder that the threat of contagion remains.

In a sign of continued concern over Europe's debt problems, Moody's Investors Service said on Friday it may cut Italy's sovereign credit rating from AA2, citing challenges ahead for economic growth due to structural weaknesses and a likely rise in interest rates.

Meanwhile, Reuters reports mixed economic data for the US on Friday:

U.S. consumer sentiment declined more than expected in June, the Thomson Reuters/University of Michigan survey showed, as consumers remained pessimistic about stagnant incomes and job prospects...

The preliminary reading showed the index at 71.8, down from 74.3 the month before. It was below the median forecast of 74.0 among economists polled by Reuters...

A separate report showed a gauge of future economic activity rose more than expected in May, but high gasoline prices and a weak housing market will see growth remaining moderate.

The independent Conference Board said on Friday its Leading Economic Index increased 0.8 percent to a record high of 114.7 after a revised 0.4 percent fall in April. Economists had expected a rise of 0.2 percent...

On Friday, the IMF forecast that U.S. gross domestic product would grow a tepid 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent growth in 2011, rising to 2.9 percent in 2012.