Bloomberg reports that investor confidence in the euro area has risen:
European investor confidence rose for the first time in four months in July after oil prices retreated and the economy gathered strength.
An index measuring sentiment in the 17-nation euro region rose to 5.3 from 3.5 in June, Limburg, Germany-based Sentix said in an e-mailed statement today. A gauge of current business conditions climbed to 19.25 from 18.50, while an indicator of expectations advanced to minus 7.75 from minus 10.50...
“It seems that the correction in commodity prices, in particular oil prices, is seen as a relief,” Sentix said in the statement. “Investors’ assessment certainly also profited from the approved support package for Greece.”
The fall in oil prices has helped drive down producer price inflation in the euro area. From Bloomberg:
European producer-price inflation slowed more than economists forecast in May as the economic recovery faltered and oil prices retreated.
Factory-gate prices in the euro region increased 6.2 percent from a year earlier after rising 6.7 percent in April, the European Union’s statistics office in Luxembourg said today. Economists had projected a gain of 6.3 percent, according to the median of 21 estimates in a Bloomberg news survey. Prices fell 0.2 percent from April, when they rose 0.9 percent.
However, resolution of the Greek debt problem may hit another stumbling block. From Bloomberg:
Europe’s effort to pull Greece back from the brink may result in a default rating by Standard & Poor’s, exposing a critical flaw in the drive to press creditors to assume a share of the bailout cost.
Standard & Poor’s said today a rollover plan serving as the basis for talks between investors and governments would qualify as a distressed exchange and prompt a “selective default” grade. That may leave the bondholders unwilling to complete the transaction and the European Central Bank unable to accept Greek government debt as collateral, impairing the lifeline it has provided the country’s banks.