U.S. Stock-Index Futures Advance as Greece Moves Closer to Securing Aid

By Rita Nazareth - Nov 7, 2011 7:03 AM GMT+0700

U.S. stock futures rose, following the first weekly drop in benchmark gauges since September, as Greek Prime Minister George Papandreou agreed to step down to allow a unity government that will secure international aid.

Standard & Poor’s 500 Index futures expiring in December advanced 0.2 percent to 1,254 as of 9:02 a.m. Tokyo time. The benchmark gauge fell 2.5 percent last week.

“So goes Greece, so goes the market,” Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4.1 billion, said in a telephone interview. “At least the appearance that they are trying to make progress by moving forward to fix the situation is being reflected positively. It’s just like the weather. As long as it’s sunny and nice, the market will continue to go up.”

Papandreou met with Antonis Samaras, the leader of the main opposition party, and “agreed to form a new government with the aim of leading the country to elections immediately after the implementation of European Council decisions on October 26,” according to an e-mailed statement from the office of President Karolos Papoulias in Athens. Papandreou has already said he won’t lead this new government, the statement said.

Trying to preserve international aid before the nation runs out of money next month, Papandreou raced to clinch an agreement on a new government, healing divisions to secure an aid agreement and avert the first default by a European Union nation. Lucas Papademos, former European Central Bank vice president, will head a Greek national unity government, To Vima newspaper reported without citing anyone.

Failed to Agree

Global stocks slumped on Oct. 31 and Nov. 1 after Papandreou announced his desire to hold a referendum on a European Union aid package, spurring concern the deal would unravel. After rallying two straight days, the S&P 500 dropped on Nov. 4 as the Group of 20 nations failed to agree on increasing the International Monetary Fund’s resources to fight Europe’s debt crisis. Stocks had rallied throughout October on optimism the crisis would ebb.

Financial shares tumbled the most in the S&P 500 last week, losing 5.4 percent, on concern about potential losses from Europe and as MF Global Holdings Ltd. filed for bankruptcy protection after making bets on European sovereign debt.

CME Group Inc. (CME) is reducing the initial margin required to back futures trades to ease the bulk transfer of accounts held by MF Global customers. The holding company for the broker- dealer run by former Goldman Sachs Group Inc. Co-Chairman Jon Corzine filed for bankruptcy protection on Oct. 31. Its broker- dealer unit, MF Global Inc., faces liquidation.

“The decision to roll back margin requirements is a positive,” Mark Grant, a managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, said in an e-mail. “Otherwise on Monday there would have been a tremendous amount of margin calls, which could have had a serious effect on the customers and caused a good amount of selling in other markets to pay for the margin calls.”

To contact the reporter on this story: {Rita Nazareth} in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net