By Sara Sjolin and Carla Mozee, MarketWatch
Athex Composite slides nearly 5%
European stocks headed lower Tuesday as concerns about Greece's
bailout negotiations continued to nag.
The pan-European Stoxx Europe 600 index slipped 0.1% to 396.58,
with only the oil and gas sector moving higher as oil futures
(CLM5) rose back above $60 a barrel
(http://www.marketwatch.com/story/oil-prices-slip-for-second-day-2015-05-05).
Gains for the energy sector helped British shares , pushing the
U.K.'s FTSE 100 up 0.5% to 7,023.93
(http://www.marketwatch.com/storyno-meta-for-guid). Trading was
closed in the U.K. for a bank holiday on Monday, when other
European markets posted solid gains
(http://www.marketwatch.com/storyno-meta-for-guid) on the back of
some better-than-expected eurozone manufacturing data.
Greek jitters: Greece's debt crisis was back in the spotlight on
Tuesday, as the anti-austerity government continued bailout talks
with its eurozone lenders. Athens is facing a 750-million-euro
($832 million) debt repayment to the International Monetary Fund
next week, but there are fears it will run out of cash unless it
reaches a deal with creditors to unlock the next tranche of bailout
money.
Austrian Finance Minister Hans Joerg Schelling told Reuters on
Tuesday that progress is being made
(http://www.marketwatch.com/story/greek-bailout-talks-making-progress-says-schelling-report-2015-05-05),
but that it remains unclear whether a deal will be struck in time
for the eurozone finance ministers' meeting on Monday.
The negotiations have been going on since Greece and its lenders
agreed on a bailout extension in February, and the two sides are
struggling to agree on which reform measures the country must
undertake to receive the next portion of aid. One of the creditors,
the IMF, fears Greece's debt burden is becoming unsustainable
again, and it has warned it may withhold bailout money
(http://www.ft.com/cms/s/0/72b8d2ae-f275-11e4-b914-00144feab7de.html#axzz3ZFIVA7wT)
unless the eurozone agrees to debt relief, the Financial Times
reported Monday. Eurozone officials have categorically ruled out a
write-down on Greece's debt.
Christian Schulz, senior economist at Berenberg, said in a note
that debt relief could carry "moral hazard" as it would "reward
Greece for reckless economic behavior at the expense of its
eurozone partners."
"Without structural reforms, and particularly without reversing
previous structural reforms, Athens will not be able to pay back
its debt," he said.
Greece's Athex Composite Index slid 4.8% to 786.13 on Tuesday,
while the yield on 10-year Greek government bonds climbed 51 basis
points to 10.94%.
Other markets: Elsewhere, Germany's DAX 30 index fell 0.9% to
11,514.67, while France's CAC 40 index was down 0.6% to
5,052.02.
A strike by train drivers in Germany
(http://www.marketwatch.com/story/germany-braces-for-rail-strike-as-train-drivers-walk-out-2015-05-05)
has brought most of the country's long-distance rail traffic to a
halt, threatening a blow to its export-driven economy.
EU forecasts:In its spring economic forecasts
(http://www.marketwatch.com/story/eu-lifts-eurozone-growth-forecast-2015-05-05-5485346),
the European Commission struck an upbeat tone on most of the
eurozone, but sharply downgraded the outlook for Greece. For 2015,
the EU's executive arm now expects the Greek economy to grow by
0.5%, compared with a previous forecast of 2.5%.
For the eurozone, the commission now sees 1.5% economic growth
in 2015, up from the 1.3% forecast previously.
Movers: Shares of UBS AG rallied 6.3% after the Swiss bank
reported first-quarter profit that beat analyst expectations
(http://www.marketwatch.com/story/ubs-profit-rises-sharply-beating-forecasts-2015-05-05).
Glencore PLC (GLCNF) shares turned higher by 1.4%, recovering
from earlier losses that came after the miner reported a
year-on-year drop in first-quarter copper production
(http://www.marketwatch.com/story/glencore-copper-production-drops-after-shutdown-2015-05-05).
Adidas AG shares pared their gain to 0.2%. The German
sporting-goods giant reported an 8.2% rise in first-quarter profit
(http://www.marketwatch.com/story/adidas-profit-up-82-helped-by-china-sales-2015-05-05),
boosted by sales growth in Western Europe and China.
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