EU stocks close steady before Greece talks

EUROPEAN stockmarkets have closed higher after massive losses the previous day as investors waited for key meetings between EU and Greek leaders on Athens' shock plan to put its latest debt rescue to a referendum. The referendum announcement on Tuesday plunged the markets into turmoil, with some bourses posting losses of 5.0 per cent or more on fears a No vote would leave the EU back at square one on how to solve its debt crisis. Investors were also on alert over rising pressure on Italy and ahead of the US Federal Reserve's latest monetary policy announcements while G20 leaders began gathering for a summit meeting now hijacked by the Greek referendum move. German Chancellor Angela Merkel and French President Nicolas Sarkozy have summoned Greek Prime Minister George Papandreou for talks today after his referendum plan raised the spectre of Greece's exit from the euro. Markets steadied as traders hoped for "a positive outcome from the meeting", Spreadex trader Simon Furlong said. "It should not be mistaken for any serious correction, there has been no positive news out as of yet." Sharp early gains on Wall Street helped the European markets as US investors anticipated more Fed help for the economy. In London, the FTSE-100 index of top companies closed up 1.15 per cent at 5484.10 points. In Paris the CAC-40 gained 1.38 per cent to 3110.59 points and in Frankfurt the DAX 30 rose 2.25 per cent to 5965.63 points. Other European markets made similar gains, with Milan up 2.31 per cent but Madrid finished marginally lower, down 0.06 per cent. In foreign exchange deals, the euro rose to $US1.3743 from $US1.3697 in New York overnight. The US dollar fell to 78.09 yen, from 78.34. On Tuesday, the European single currency had tumbled to $US1.3609 - the lowest since October 12 and well below the $US1.42-level reached last week when markets had welcomed the eurozone debt rescue plan unveiled in Brussels. Mr Papandreou unexpectedly announced on Tuesday a confidence vote and a national referendum on last week's EU debt deal, taking a political gamble in an attempt to silence opposition to his policies. The Greek PM was left battling for his political life after narrowly securing cabinet backing for the controversial referendum, ahead of a confidence vote in parliament later this week. Analysts fear that the potential departure of Greece from the eurozone club could spell the end of the euro project and spark a fresh economic downturn. "Investors remain extremely wary," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers in London. "The future of Europe, and with it, potentially the health of the global economy, continue to hang in the balance." Shell-shocked investors are concerned that the raging fires of the eurozone debt crisis, which has already resulted in gigantic EU-IMF bailouts for Greece, Ireland and Portugal, could now engulf Italy and possibly Spain. In Asia on yesterday, Tokyo closed down 2.21 per cent but Hong Kong rose 1.88 per cent and Shanghai gained 1.38 per cent.