Global markets signaled growing faith in Greece’s ability to clinch a bailout, as U.S. and European stocks soared and the euro jumped the most in more than two years against the yen.
The Standard & Poor’s 500 Index climbed 1.2 percent at 4 p.m., the most since May 8, while the Stoxx Europe 600 Index capped its biggest two-day gain since 2011 as Greek contagion risk subsided. Treasuries fell with German bunds and the yen on reduced haven demand. The Shanghai Composite capped its first back-to-back gain since June 24 after the government banned insiders from selling stocks, with about half of listed companies halted.
The prospect of a deal to end a near-six-month standoff between creditors and Greece’s Syriza-led government brought relief to financial markets that have seen almost $6 trillion wiped from equities in the past two months. Investors have fled toward safety as turmoil in Greece and China raised concern about global economic growth.
“A relief rally today makes sense as the impediments have been temporarily removed,” said Larry Peruzzi, director of international trading at Cabrera Capital Markets LLC in Boston. “Markets survived a combination of Greek and Chinese body blows and a standing four-hour count to come out swinging Friday.”
Equities maintained gains after Federal Reserve Chair Janet Yellen said in a speech that she still expects to raise interest rates this year and repeated that the subsequent pace of increases will be gradual. The Fed is moving cautiously toward its first interest-rate increase in almost a decade as Yellen weighs conflicting pressures at home and from abroad.
“I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step,” Yellen said in the text of a speech Friday in Cleveland.
While the International Monetary Fund cut its forecast for global growth this year on Thursday, citing a weaker first quarter in the U.S., the Washington-based lender expressed confidence that financial-market turbulence from China to Greece won’t cause widespread damage.
Friday’s rebound in the S&P 500 erased the index’s loss for the week. The Chicago Board Options Exchange Volatility Index, which jumped 19 percent this week through Thursday, erased nearly all of that on the last day as the gauge retreated 16 percent, the most since December.
The Nasdaq Composite Index surged 1.5 percent, the biggest gain since Jan. 22. Apple Inc. rallied 2.7 percent, its best performance since May, as it snapped a five-day decline that brought it close to a 10 percent drop from its peak.
The Stoxx Europe 600 Index jumped 2 percent, extending Thursday’s 2.2 percent advance, after getting close to a correction during the previous two days. The measure closed almost 10 percent below its April record on Wednesday.
After months of escalating tension and price swings, Greece offered to meet most of the demands made by creditors in exchange for a bailout of 53.5 billion euros ($59.4 billion).
French President Francois Hollande said Greece’s proposals were “serious” and “credible” as the Greek Parliament met to discuss the plan, which mirrored that from creditors on June 26 and was rejected in a Greek referendum.
Greece’s request for a three-year bailout includes plans for sales-tax increases and cuts in public spending on pensions. Greece also proposed the restructuring of its debt and a package of growth measures of 35 billion euros.
Italian bond yields have surged from a record-low 1.03 percent set on March 12 and yield spreads versus German bunds widened as a standoff over aid for Greece pushed the nation to the brink of an exit from the euro area.
The country’s 10-year bond yield dropped 4 basis points to 2.13 percent. Spain’s fell 5 basis points to 2.12 percent and Portugal’s sank 7 basis points to 2.83 percent.
Germany’s 10-year bund yield jumped 18 basis points to 0.90 percent, the yield on similar-maturity U.K. gilts increased 13 basis points to 2.08 percent and Treasury 10-year note yields increased 8 basis points to 2.40 percent after climbing 13 basis points on Thursday. The yield on 30-year Treasuries had the biggest two-day gain since 2013.
The euro strengthened as much as 2.5 percent to 137.29 yen before trading at 136.84. It gained 0.9 percent to $1.1140.
The yen, which typically moves at odds with Japanese equities and is seen as a haven asset, weakened 1.2 percent to 122.84 per dollar as it fell at least 0.7 percent against its 16 major peers.
The MSCI Emerging Markets Index advanced 1.5 percent. The gauge has rallied 3.2 percent in two days, snapping a six-day losing streak and paring this week’s loss to 3.2 percent.
The Shanghai Composite Index rose 4.5 percent, advancing 11 percent in two days. It’s still down 25 percent from its June 12 peak. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong climbed 3.6 percent, after rising 3.1 percent on Thursday.
Chinese regulators have unveiled market-boosting measures almost every night over the past two weeks to shore up a stock market that lost as much as $3.9 trillion in less than a month.
The Bloomberg Commodity Index increased 0.3 percent, rising for a third day, the longest streak since June 18. West Texas Intermediate oil was little changed, as crude capped the steepest weekly loss since March with a decline of 7.4 percent.
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