Hopes that policymakers are preparing a grand plan to finally contain Europe's debt crisis bolstered stocks Tuesday ahead of a meeting between the leaders of Greece and Germany. Though investors appear to be clutching at the idea that Europe is preparing a three-pronged strategy to get a grip on the crisis, previous bouts of optimism have dissipated quickly. If progress is not seen to be made, then the current rebound in investors' appetite for risk could dissipate. The talk in the markets is that the eurozone is preparing to allow Greece to default on 50 per cent of its debts, and massively expand its rescue fund, the European Financial Stability Facility, and recapitalize the banks. Investors will be keeping a close watch on comment from the eurozone as governments work to get their Parliaments to back measures to boost the eurozone's rescue fund. They are also watching what may emerge from a meeting later Tuesday between German Chancellor Angela Merkel and Greek Prime Minister George Papandreou. Greece appears to have done enough to convince its international creditors to get the next batch of money due from its €110 billion (US$148.5 billion) bailout facility, provided the country's lawmakers back a property tax later. Without the €8 billion tranche, Greece faced running out of money to pay all its commitments by the middle of October. The speculation in the markets is that policymakers are working on a plan to make sure this will be the last time that Greece will have to go through this current three-monthly inspection from debt inspectors. Britain's finance minister George Osborne said last weekend that the euro countries have six weeks at most to save the euro. As such, the indication is that the meeting of the leaders of the Group of 20 leading industrial and developing nations will sign off on a Greek default at their 6 November meeting in the French chic resort of Cannes. "On good days, equities look cheap and we put our faith in Angela Merkel, and on bad days, we look into the gates of eurozone hell," said Louise Cooper, markets analyst at BGC Partners. Tuesday appears to be heading to be one of those good days and a strong performance in Asia has followed with a perky opening in Europe and anticipated gains at the Wall Street open. In Europe, Germany's DAX was up 3.1 per cent at 5,511 while the CAC-40 in France rose 3.1 per cent to 2,949. The FTSE 100 index of leading British shares was 2.2 per cent higher at 5,200. Wall Street was also poised for solid gains at the open later — Dow futures were up 1.1 per cent at 11,092 while the broader Standard & Poor's 500 futures rose a similar rate to 1,171.
