Despite Slovakia’s vote Tuesday night against ratification of the expansion of the Greek bailout fund, markets and the euro on Wednesday, after a period of early losses, made substantial gains in anticipation of a second vote by the Slovak parliament that was expected to approve the measure.
The vote on the European Financial Stability Facility (EFSF) had been tied to a confidence vote on the government of Iveta Radikova, Slovakia’s prime minister, and the political opposition voted against her rather than the measure, according to a Bloomberg report. Robert Fico, leader of the largest opposition party, said after the vote that Slovakia “must sign up to the rescue fund.” Although a second vote had not yet been scheduled, talks on that vote were expected to begin Wednesday.
Markets shrugged off early losses to log their biggest gain in five weeks by midmorning, with the FTSEurofirst 300 index up 1.1%. The euro, too, rose to a high it had not seen in almost four weeks as investors expected a new vote to resolve the EFSF issue and also cashed in earlier short positions to reap profits.