European stocks rose early Wednesday, tracking gains in the U.S.
and Asia, but moves are expected to be limited and trade thin, with
investors wary ahead of this weekend's Greek referendum.
Overnight, Greece became the first advanced economy to default
on a payment to the International Monetary Fund. This, however, was
widely anticipated and "came as no surprise following the events of
the last few days," said Jim Reid, a senior strategist at Deutsche
Bank.
Separately, the Greek government Tuesday came up with new reform
proposals which the Eurogroup of finance ministers is expected to
look over later this morning. These are sparking some hope of a
last-minute deal.
In early trade, the Stoxx Europe 600 added 0.6% following two
sessions of heavy losses. The euro was broadly steady against the
dollar at $1.112 and debt markets were stable too.
The yield on the German 10-year bond was largely unchanged on
the day at 0.77%. The yield on 10-year Italian debt was steady at
2.31% and was marginally higher on the Spanish 10-year at 2.27%.
Yields rise as prices fall.
Greek stock markets will remain closed this week and on Tuesday
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 almost ground
to a complete halt.
"The latest headlines suggest negotiations are ongoing but we
suspect markets will remain reluctant to commit to headlines at
this stage," BNP Paribas strategists wrote in a note.
Others agreed that investors would largely be adopting a
wait-and-see approach for the rest of this week.
All eyes are now firmly on Sunday's referendum on whether to
accept the terms that creditors are offering in return for more
bailout funds, Citigroup economists wrote in a note.
Beyond Greece, investors will on Wednesday be watching for
manufacturing data from around Europe and the U.S. Later in the
session, the U.S. will publish the latest ADP private-sector
employment snapshot.
Brent crude was trading 1.5% lower early on Wednesday at $62.68
per barrel in early trade. Gold was just short of 0.2% higher at
$1,173.50 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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