European stocks slipped Thursday, wiping out the previous
session's late rally that was spurred by hopes Greece is close to
reaching a deal with its creditors.
The Stoxx Europe 600 was 0.4% lower in early trade. The index
had surged to close 1.3% higher on Wednesday after the Greek prime
minister said Athens was close to hammering out an agreement.
But European officials played down the chances of an imminent
deal, saying there was still some way to go before the impasse over
the future of Greece's finance is resolved, and the euphoria in
markets receded Thursday.
The comments suggest "this incredibly protracted showdown still
has some way to go", said interest rate strategists at
Rabobank.
Germany's DAX index fell 0.4%, France's CAC 40 was down 0.6%,
and the U.K.'s FTSE 100 was 0.3% lower.
Sentiment in European markets is likely to remain sensitive to
each piece of news on the Greek negotiations, said Ian Williams,
economist and strategist at brokerage Peel Hunt.
Despite the pullback in equity markets, Greek bonds extended
Wednesday's rally. The two-year Greek bond yield fell by around 0.3
percentage point to 22.65%. Still, yields at this level indicate
investors are factoring a significant chance of default by
Athens.
In currency markets, the euro continued to push higher, having
rebounded along with equities late on Wednesday. The common
currency was up 0.3% at $1.0929.
In commodities, Brent crude oil was up 0.4% at $62.29 a barrel,
while gold climbed 0.3% to $1,188.60 an ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com
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