BERLIN — European markets were up in midday trading Thursday, showing relief that leaders of Germany and France remain committed to supporting Greece as it navigates a debt crisis that threatens international financial contagion.
Markets were up for a third day despite news that a rogue trader at Swiss banking giant UBS may have cost the bank $2 billion, potentially forcing a third-quarter loss for the firm. The company released a terse statement that gave few details. Asian markets were also up for the day.
On Thursday, German Chancellor Angela Merkel said that her country had a “duty and responsibility to make its contribution to securing the euro’s future,” according to wire services. But she said in a speech to open the Frankfurt Auto Show that bringing stability to the euro area would take time, and that no “one-time thunderbolt” would do the trick.
Merkel also condemned the idea of Eurobonds — a euro area-wide debt instrument in which Germany’s creditworthiness would be a guarantee for weaker countries such as Greece — as “absolutely wrong.”
Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreaou spoke Wednesday night in an emergency three-way phone call, and statements afterward expressed support for Greece to remain in the euro area and a promise from Greece to meet austerity targets and other economic measures as a precondition to receiving a new tranche of money. But the leaders released no new details about steps being taken to support Greece.
Even so, investors appeared mollified, at least for the time being. Germany’s DAX was up 2.18 percent to 5456.38, the STOXX 50 was up 2.24 percent to 2129.96 and the FTSE 100 was up 1.70 percent to 5316.10. In Japan, the Nikkei 225 closed up 1.76 percent for the day, to 8668.86. U.S. stock futures were up slightly.
UBS stock sank, however, after the news of the unauthorized trading was released in a brief statement on its Web site. The stock was down 5.67 percent on the Swiss exchange Thursday morning. The disclosure brought to mind memories of a rogue trader at French bank Societe Generale who in 2008 cost the bank 4.9 billion euros.
In Germany, signs of a deeply divided government response to the bailout remained apparent. Merkel has pushed for a unified response to the Greek crisis and has steered clear in recent weeks of suggesting that the country may need to default on its debts. The head of Merkel’s junior coalition partner, the Free Democrats, has given a series of interviews this week suggesting just that.
His latest was to the Tagesspiegel newspaper, published on Thursday.
“One has to say what can happen if Greece doesn’t keep to its promises for reform,” said Economy Minister Philipp Roesler, though he added that he did not want to see a default. “We want to keep Greece in the euro zone,” he said.