- Associated Press - Wednesday, June 22, 2011

LONDON — The Greek government’s victory in a confidence vote helped steady markets on Wednesday ahead of an interest rate decision from the Federal Reserve, though a shock profit warning from Dutch lighting and electronics firm Philips kept sentiment in check.

Following days of febrile trading activity due to concerns about a possible Greek default, investors have been calmed — for now, at least — by the confidence vote early Wednesday in Greek Prime Minister George Papandreou’s government.

Investors will be hoping that paves the way to the passage of another batch of austerity measures in a vote next Tuesday. The Greek Parliament needs to pass the additional €28 billion ($40.2 billion) in budget cuts and new taxes and back a €50 billion privatization program so the country can get its hands on €12 billion of rescue loans to stave off a disastrous default by mid-July.

Greece’s partners in the eurozone and the International Monetary Fund have made the cash contingent on a positive Parliamentary vote on the austerity package. Predictions that it will pass have helped Athens’ main stock market rally 0.3 percent.

“The argument will run on regardless of how best to repair the broken monetary union, but for the time being at least, traders have some breathing room,” said Ben Critchley, a sales trader at IG Index.

Some of the calm was dented by a warning by Royal Philips Electronics NV that worse-than-expected demand in western Europe hit its second quarter performance. Its shares were trading over 12 percent lower in early afternoon trading in Amsterdam, contributing to the underpeformance of the AEX index. It was 1 percent lower at 333.

Elsewhere in Europe, the FTSE 100 index of leading British shares was down 0.5 percent at 5,746 while Germany’s DAX fell 0.1 percent to 7,275. The CAC-4o in France was 0.5 percent lower at 3,856.

Wall Street was poised to open a bit lower, too — Dow futures were down 0.3 percent at 12,051 while the broader Standard & Poor’s 500 futures fell 0.4 percent to 1,283.

The focus of attention in the U.S. will be on the Fed’s rate-setting meeting and the ensuing press briefing from Fed chief Ben Bernanke.

Analysts will be looking to see if Bernanke sounds more dovish after the recent run of U.S. economic data.

Derek Halpenny, an analyst at The Bank of Tokyo-Mitsubishi UFJ said Bernanke was likely to acknowledge the ‘soft-patch’ but also reiterate the “Fed’s confidence in recovery taking hold in the second half of the year.”

The dollar could be heavily impacted by the tone of Bernanke’s press briefing. Ahead of it, it was steady, with the euro 0.1 percent lower at $1.4364. The dollar was flat at 80.22 yen.

Earlier in Asia, markets were buoyed following the Greek confidence vote.

Japan’s Nikkei 225 index gained 1.8 percent to close at 9,629.43, while Hong Kong’s Hang Seng ended marginally higher at 21,859.97.

Mainland Chinese shares were mixed, overshadowed by a government forecast that inflation will climb further in June due to massive flooding in some regions.

The benchmark Shanghai Composite Index edged 0.1 percent higher to 2,649.30 while the Shenzhen Composite Index was little changed at 1,088.30.

Oil prices remained relatively soft, with benchmark oil for August delivery down 73 cents to $93.45 a barrel in electronic trading on the New York Mercantile Exchange.

Pamela Sampson in Bangkok contributed to this report.

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