Greek stocks rocketed higher on Thursday, reflecting investor hopes that the national elections in three days will yield a government that can avoid a messy confrontation with Athens' bailout creditors and keep the country in the euro-zone.
Investors appeared to be reacting to market rumors of new public opinion polls, which cannot be openly released because Greek law forbids their publication in the last two weeks of campaigning. Athens' main stock index closed a stunning 10.1% higher, with banking shares up a collective 23.6%.
Popular resentment of austerity measures, which Greece had to take as a condition of receiving its rescue loans, has fueled a surge in popularity for political parties that want to renege on the country's bailout terms.
Sunday's election is seen as a close race between the biggest such party, the radical left Syriza, and the conservative New Democracy party, which wants to largely adhere to bailout pledges, with tweaks in favor of low earners.
"There's an investor sentiment buildup, ahead of the elections, that there might be a pro-European government formed, which the market has discounted," Eurobank EFG analyst Nikos Koskoletos said.
"Nevertheless, we remain in highly volatile territory."
Greece's creditors — its European partners and the International Monetary Fund — have warned that the cash lifeline would dry up if a new government played tough and tried to unilaterally abandon previous pledges for further cutbacks and reforms.
Rally said fragile
Without the money, Greece would go bankrupt and likely have to leave the 17-country euro-zone.
