European stocks regained ground after an earlier drop
Tuesday, but gains were limited due to uncertainty about Greece’s future in
the eurozone after key debt talks fell apart.
The Stoxx Europe 600 edged higher by less than 1 point to 376.84. The index opened lower following a collapse in debt talks late Monday between eurozone finance ministers and Greece. Greece’s new anti-austerity government did not accept an extension to its 240-billion-euro bailout program under the conditions offered by its European creditors.
Greek bank stocks were among the worst performers on the Stoxx
600, with Piraeus Bank SA shares losing 5.8%, National Bank of Greece
SA down 4.3%, and Eurobank Ergasias SA shedding 3.7%.
The moves pressured Greece’s Athex Composite , which fell 2.6% to 837.39. The Athex’s month-to-date gain has now been reduced to 16%.
A new Eurogroup meeting may be set for Friday.
European Central Bank officials are to hold a regular meeting on Wednesday. Discussion about emergency liquidity assistance, which was recently increased for Greek banks, is expected to be included in the agenda. Speaking about the ELA funding “looks certain to add pressure, by reiterating the current ELA program will remain only as long as Greek banks are seen as solvent and also as long as the Greek government is in talks with the euro area,” said Société Générale economist Yvan Mamalet.
Germany’s DAX narrowed its loss to 0.3% at 10,893.27. The closely watched ZEW indicator of German economic sentiment rose in February to 53.0, the highest reading since February of last year. But the reading, released Tuesday, fell short of the 55.5 consensus estimate.
The Center for European Economic Research, or ZEW, said the ECB’s quantitative easing and “unexpectedly high” economic growth in the fourth quarter have boosted sentiment. “On the other hand, the intensification of the Ukraine crisis and the collision course of the new Greek government are dampening expectations,” said ZEW President Professor Clemens Fuest in a statement.
France’s CAC also came off deeper losses, notching a 0.1% gain at
4,745.40, while the U.K.’s FTSE 100 turned higher by 0.3% to 6,874.56.
On Tuesday, the U.K.’s Office for National Statistics said consumer-price inflation slowed to 0.3% in January, the lowest annual rate since March 1960.
The euro had been lower after the breakdown in talks, but recently recovered to buy $1.1409, versus $1.1356 late Monday.
