European stocks extend 7-year high on Greek bailout deal

(Bloomberg) — European stocks extended a seven-year high as Greece reached a bailout deal and the Federal Reserve pledged patience on raising interest rates. Greek shares surged.

The Stoxx Europe 600 Index rose 0.6 percent to 387.25 at the close of trading, pushing its gains this year to 13 percent. The U.K.’s benchmark FTSE 100 Index closed at an all-time high, climbing 0.5 percent to surpass the previous record in 1999.

Greece’s ASE Index soared 9.8 percent, following a market holiday on Monday, as euro-area leaders approved a bailout extension for four more months. The gauge rose to the highest level since former Prime Minister Antonis Samaras announced elections in December, triggering concern over debt negotiations. National Bank of Greece and Alpha Bank AE rallied 17 percent.

“Today is a huge relief for the banks, which are a big part of the index, because part of the story is that they will be kept afloat,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, referring to Greek equities. “Yellen signaling the Fed will be patient in raising rates was the final good news that we wanted today after Greece.”

European stocks extended gains as Fed Chair Janet Yellen said the central bank will be flexible about the timing of an interest-rate rise even after it changes its forward guidance. She reiterated in a testimony before the Senate Banking Committee that an increase is unlikely for “at least the next couple” of meetings.