By Josie Cox
European markets remained under pressure Tuesday, as investors
cautiously awaited new developments in the Greek debt crisis.
Stocks and bonds fell and the euro declined against the U.S.
dollar, but most of the moves were smaller than those suffered a
day earlier.
On Monday, equities and bonds slumped following a tumultuous
weekend, which saw Athens announcing a referendum this Sunday on
whether to accept the terms that creditors are offering in return
for more bailout funds.
Greece subsequently shut down its banking system for six days as
the nation's central bank moved to impose controls to prevent money
from leaving the country.
On Tuesday, Greece asked for a new bailout before its current
one expires and it defaults on a payment to the International
Monetary Fund. But many traders and investors said they were
hesitant to make big bets until there is meaningful news or
progress toward a deal, or until Sunday's vote.
"We are waiting and seeing and we will only trade ahead of
Sunday if we get a very strong signal or news," said Wouter
Sturkenboom, an investment strategist at Russell Investments, which
has around $272 billion in assets under management.
The Stoxx Europe 600 ended the session 1.3% lower, having on
Monday recorded a 2.7% loss--its largest single-day percentage
decline since October.
Italy's FTSE MIB and Spain's IBEX--two indexes that suffered
particularly sharp falls Monday--ended 0.5% and 0.8% lower,
respectively.
Greek bond yields surged anew, but elsewhere in debt markets
moves were limited. Yields on German 10-year government bonds were
broadly steady at 0.76% in late European trade. Yields fall as bond
prices rise.
Spanish and Italian bonds recovered slightly after Monday's
losses.
Earlier Tuesday, the Luxembourg Bourse announced that it had
suspended trading of bonds issued by Greece's biggest banks until
further notice. It has also suspended trading in sovereign bonds
and debt issued by Greek national railway company Hellenic
Railways.
Bond trading platform Tradeweb said it had blocked trading in a
number of Greek government bonds after a notification from the U.K.
regulator.
Traders said turnover in Greek government debt has ground almost
to a halt this week. Greece's stock market will remain closed this
week along with the country's banks.
Greece on Monday said it would default on a EUR1.55 billion
($1.73 billion) International Monetary Fund payment due
Tuesday--the day its current bailout program expires--though many
investors said they had expected this.
"This is clearly now a fast-moving situation and it is still
unclear as to how it will play out," said Gary Jenkins, a credit
strategist at London-based asset manager LNG Capital.
"The situation is fluid, headline-driven and subject to changes
in direction," said Tom Levinson, a strategist at Sberbank
For the time being, the Greek situation appears to be in
something of a "holding pattern" said Simon Derrick, chief market
strategist at BNY Mellon.
The euro was 0.6% lower Tuesday against the dollar, at
$1.115.
Brent crude was 1.9% higher at $63.18 a barrel. Gold lost 0.9%
to trade around $1,168.10 a troy ounce.
Tommy Stubbington contributed to this article
Write to Josie Cox at josie.cox@wsj.com