By Josie Cox
European stocks rose Wednesday, spurred by some robust corporate
earnings and strong data on eurozone growth from surveys of
purchasing managers.
The Stoxx Europe 600, having sold off sharply Tuesday, was
marginally higher by early afternoon, while individual country
indexes clung to gains.
Germany's DAX index, which had traded lower earlier in the
session and fell sharply Tuesday, was around 0.5% higher. It was
one of the best-performing indexes in the region, propelled by
strong quarterly results from Allianz SE and BMW AG.
Concerns over Greece's future continued to weigh on the
market.
The country made a EUR200 million ($224 million) interest
payment to the International Monetary Fund on Wednesday, but still
faces a EUR750 million repayment deadline on May 12. Many
commentators are struggling to see where the cash is going to come
from.
Strategists at Nomura wrote in a note that while it looks like
Greece will manage to meet Tuesday's deadline, they remain
skeptical that the country will meet additional obligations later
this month.
Yields on government bonds continued to rise as a broader
selloff stretched into its second week. Yields in Germany, France,
Spain, Italy and Portugal edged higher on Wednesday--some hitting
their highest levels so far this year--reflecting a fall in
prices.
In the U.K., the yield on the 10-year Gilt rose to just over 2%
late morning, its highest level since December last year, a day
before the U.K. goes to the polls in one of the country's most
uncertain elections in decades.
The German 10-year yield, meanwhile, climbed to above 0.59%
early afternoon, a level last seen before the European Central Bank
announced its quantitative-easing program in January.
Less than two weeks ago, the 10-year Bund yield hit an all-time
low of 0.05%, spurring predictions of zero or even negative yields
on the benchmark for European credit markets.
In Greece, yields on two-year and 10-year government bonds were
both higher on the day at over 21% and just over 11%, respectively.
Trading, however, remains highly illiquid, meaning that even small
moves are magnified.
An inverted yield curve, where bonds due sooner yield more than
those due later, indicates that investors see an elevated chance of
the country defaulting on its debt.
Although the IMF said Tuesday that its officials hadn't pushed
for large-scale debt relief in recent negotiations for emergency
financing for the country, "Greece and its creditors are still
clearly not fully aligned in views," said Jim Reid, a strategist at
Deutsche Bank.
The euro was resilient despite the uncertain political backdrop,
but strategists attributed this more to dollar weakness.
After a rampant start to the year, the buck has weakened in
recent days, with some investors fearful that its rally had become
overdone.
In the U.S., an employment survey released Wednesday showed
private-sector payrolls once again expanded at a mediocre pace last
month, and slower than expected, which further weighed on the
buck.
The euro traded at $1.127 to the dollar, around 0.8% higher on
the day. The dollar was also 0.3% weaker against Japan's yen at
around Yen119.60 and around 0.5% higher against the British
pound.
Write to Josie Cox at josie.cox@wsj.com
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