European stocks end down on renewed Greece fears

30 May 2015 | Author: | No comments yet »

European Stocks Fall on Greece Jitters.

German and French stocks dragged European shares to their biggest decline in a month amid investor concern Greece won’t reach an agreement with creditors in time for a debt repayment. “The declines are broad based, which suggests it’s also some end-of-month rotations,” said Espen Furnes, who helps oversee $85bn at Storebrand Asset Management in Oslo. Mergers and acquisition activity boosted Syngenta, which was building up defences for a possible higher bid from Monsanto, according to a Bloomberg report.NEW YORK (Reuters) – Global equity markets and bond yields both fell on Friday, as data showed the U.S. economy contracted in the first quarter and as investors were unnerved by mixed signals from Greece’s debt talks.

The Mediterranean nation hasn’t yet said how it will make almost €1.6bn in International Monetary Fund payments scheduled for next month, with the first transfer due on June 5. Still, it was a downbeat session overall, with buyers absent and financials in decline amid anxiety over Government pressure on bank s to cut mortgage rates. Conflicting reports that Athens was close to clinching a reforms-for-cash deal with its creditors pushed German 10-year bond yields down 4 basis points to just under 0.50 percent. “It’s just Greece, Greece and Greece,” said David Madden, a market analyst at IG in London. “The lack of news in either direction tells you why traders are sitting on their hands.” U.S. debt yields also dropped, with the 30-year U.S. Treasury yield falling to its lowest level in three and a half weeks, at 2.84 percent, while benchmark U.S. 10-year yields hit a three-and-a-half-week low at 2.097 percent.

International lenders on Friday insisted they weren’t considering pushing Greece out of the currency. “We’ve had a lot of divergent information on the Greek situation this week, but to hear this from the IMF is significant. Ryanair finished out at €11.60, down 1.94 per cent on the day amid expectation in the market that it will accept IAG’s offer for its Aer Lingus shares. It’s a reminder that Greece is still a risk hanging over European equities,” said François Savary, who oversees about $10 billion of assets as chief investment officer at Swiss bank Reyl. Frederik Ducrozet, an economist at Crédit Agricole, CRARY -1.32 % said he still thinks that a last-minute deal to avoid a Greek default will be reached, but that the risks to that scenario are increasing.

Consumer sentiment fell this month, a survey by the University of Michigan showed, while the Institute for Supply Management-Chicago Business Barometer unexpectedly fell in May. Separate data showed that U.S. consumer sentiment dropped in May to a six-month low. “Greece has been bubbling all week, but this data is perhaps worse than most had expected so it is certainly one reason for the end-of-week lurch lower in European markets,” Mr.

Higher rates would crimp bond prices, which move inversely to their yields. “The market simply doesn’t believe the data will be strong enough to let the Fed (boost rates) this year,” said Aaron Kohli, interest rate strategist at BNP Paribas in New York. Traders attributed the volatility to end-of-month positioning heading into the weekend, with investors nervous over developments in Greece’s talks with international lenders. The index has rallied 2.6 percent since lows hit on May 7th, boosted by a Tory election victory that investors said removed uncertainties over regulation and the economy.

Analysts said, however, that big gains are unlikely while Greek uncertainty looms. “[The euro] continues to wait for headlines from Greece; there is still no deal and international creditors seem to suggest that one isn’t imminent either,” said foreign-exchange analysts at Citigroup. The dollar index was down 0.06 percent at 96.902 and remained on track for a rise in May, resuming a string of nearly uninterrupted monthly gains that began last July.

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