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Global Markets Lifted On Hopes Greece Will Pass Confidence Vote

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GREEK DEBT CRISIS

LONDON (AP) -- Hopes that the Greek government will pass a crucial confidence vote later Tuesday, paving the way for the debt-stricken country to get vital short-term loans, helped lift world markets.

Greek Prime Minister George Papandreou faces a parliamentary vote of confidence in the new cabinet he formed last week.

If Papandreou's new government fails to get the necessary Parliamentary support in a midnight vote, it would throw into question whether it can pass a critical new austerity bill by the end of the month. Without parliamentary approval for the new measures, Greece will not get the next installment of its bailout -- funds the country needs to avoid default.

The prevailing view in the markets is that Papandreou will get the necessary support. His Socialist party holds a five-seat majority in the 300-member legislature, and a simple majority is needed to pass.

Analysts said that would effectively mean the deputies will back the austerity measures, too, in a vote next week, clearing the way for Greece to get its next euro12 billion ($17 billion) bailout loan.

"Indications over the last 24 hours or so have certainly been that the government will survive, if only because the alternative would be so dire," said Beat Siegenthaler, an analyst at UBS.

Without the next batch of bailout loans, Greece would be unable to pay back its debts. A default could spark a financial maelstrom around the world, dragging down Greek and European banks as well as stoking renewed fears over the public finances of other euro countries, such as Portugal, Ireland and Spain.

Such fears, which have dominated markets over the past few weeks, eased on Tuesday. New steps by the EU to insulate Greece's debt problems from affecting other struggling countries like Ireland and Portugal have also helped shore up confidence.

In Europe, the FTSE 100 index of leading British shares was up 0.6 percent at 5,725 while Germany's DAX rose 0.5 percent to 7,190. The CAC-40 in France was 0.8 percent higher at 3,831.

The euro was flat at a relatively elevated $1.435.

Wall Street was also poised to open fairly strongly -- Dow futures were up 0.3 percent at 12,048 while the broader Standard & Poor's 500 futures rose 0.3 percent at 1,278.

Longer-term, the markets still think that some sort of Greek debt restructuring will have to take place. Many analysts cite the sheer size of Greece's debt, its slow growth and unstable politics as a toxic combination that will likely result in some form of renegotiation of the public debt.

Earlier in Asia, a number of key indexes were higher by 1 percent or more. Japan's Nikkei 225 gained 1.1 percent to close at 9,459.66, a day after the government upgraded its economic assessment for the first time in four months, as the world's No. 3 economy continued to battle back from a devastating earthquake on March 11.

Hong Kong's Hang Seng gained 1.2 percent to 21,850.59, while South Korea's Kospi added 1.4 percent to 2,048.17. Shanghai's main index also ended 1 percent higher at 2,646.48.

The more positive tone in markets was evident in oil prices too, which have taken a battering of late on concerns over the global economy and the Greek debt crisis. Benchmark oil for July delivery was up 87 cents to $94.13 a barrel in electronic trading on the New York Mercantile Exchange.

Pamela Sampson in Bangkok contributed to this report.

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