European stocks fell Thursday, after finance chiefs from the
region cut short negotiations over a Greek deal, citing significant
divisions on pension cuts and other conditions.
In early trade, the Stoxx Europe 600 slipped 0.5%, while
Germany's DAX lost 0.4% and France's CAC dropped 0.6%. Greece's
Athex fell 0.7% taking declines so far this month to over 6%.
Outside the eurozone, the U.K.'s FTSE 100 was 0.2% lower.
Overnight, eurozone finance ministers called off a key meeting
after little more than an hour, saying that Greek Prime Minister
Alexis Tsipras first had to agree on budget cuts and policy
overhauls with the three institutions overseeing the country's
bailout.
The two sides are due to reconvene later Thursday morning with
the hope of reaching an agreement on the aid measures.
Earlier in the week, stocks had rallied with investors sensing a
breakthrough in negotiations.
However, Barclays economists, in a note on Thursday, said that
some of that "euphoria" had diminished. "The situation remains very
tense, particularly with respect to the banking sector," they
added.
Lee Hardmann, a strategist at Bank of Tokyo-Mitsubishi UFJ,
wrote in a note that failure to reach an agreement by the end of
the week "would increase the likelihood that capital controls will
soon need to [be] implemented in Greece as deposit flight from
Greek banks would likely accelerate."
Athens' main stock index is down 5.4% so far this month. Shares
in the country's four biggest banks have all lost between 25% and
58% in value so far this year.
Greek bonds, which sold off sharply Wednesday after rising
earlier in the week, were higher on Thursday morning. The yield on
the country's two-year benchmark bond was at 21.4%, around a fifth
of a percentage point lower on the day. Trade, however, remains
very thin, strategists say. Yields rise as bond prices fall.
Demand for assets considered safest during times of market
stress continued to support German government bonds, sending the
yield on the 10-year benchmark bond to 0.83%, around 0.02
percentage point lower in the day.
The euro was 0.1% higher against the dollar at around
$1.119.
In Asia on Thursday, stocks slipped too, with strategists citing
concerns over Greece. The Nikkei Stock Average ended the session
0.5% lower at 20,771.40.
In commodity markets, Brent crude was 0.1% higher at $63.58 per
barrel. Gold added 0.3% to $1,176.10 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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