European stock exchanges recovered slightly this afternoon after rumours that the Greek Prime Minister George Papandreou may resign. Dealers hope that if he does, plans for a referendum to test support for stringent austerity measures will be scrapped.

“The mood changed completely. The hope that the Greek referendum plan will be scrapped is a source of relief for investors for the time being. The question is how things will turn out in the long term,” tax consultant Sijmen Plomp of Hof Hoorneman Bankers says.

Afternoon trading at the AEX index in Amsterdam was 0.6 percent up at exactly 300 points. The MidKap index for medium-sized Dutch companies was also up 0.6 percent to 469.55 points. In London, Paris and Frankfurt stock exchanges climbed between 0.2 and 1.6 percent. The euro is now valued at 1.3785 dollars, compared to 1.3770 at the end of European trading on Wednesday.

Disagreement
The Greek cabinet has been holding an emergency session since 11 o’clock this morning as there is disagreement about Papandreou’s plan to hold a referendum on the financial rescue package. Greek Finance Minister Evangelos Venizelos and Development Minister Michalis Chryssohoidis reportedly oppose the poll.

Dimitris Lintzeris, a member of Papandreou’s socialist Pasok party, has urged the prime minister to stand down. A confidence vote is due to be held in parliament on Friday. There is no certainty that the prime minister will survive.

(nc/hs)

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