European stocks gave up early gains to close mixed yesterday as investors grew impatient for Greece to finally seal a bailout deal with creditors and avoid a potentially disastrous default.
Dealers said the markets were firmer earlier on hopes that the Greek coalition parties would sign up to the latest set of austerity measures in return from fresh aid from the EU and International Monetary Fund.
The key issue is whether Greek political leaders, with an eye on early general elections, can accept more spending and job cuts on top of the hugely unpopular measures already implemented.
In London, the FTSE 100 index of leading shares closed down 0.24 per cent at 5,875.93 points. In Paris, the CAC-40 index was virtually unchanged at 3,410.00 points and in Frankfurt the DAX 30 slipped a marginal 0.08 per cent to 6,748.76 points.
Milan and Madrid finished in positive territory but Lisbon bounced 1.9 per cent, having been up some three per cent at one stage as investors bought up what are now very cheap bank stocks.
David White at Spreadex in London said the markets had “largely priced the outcome of a (Greek) deal being made already, which leaves the paradox of a deal as likely but any upside as a result being subdued.”
In New York, stocks opened flat but then slipped back, with the blue-chip Dow Jones Industrial Average down 0.38 per cent at around 1700 GMT and the Nasdaq Composite down 0.28 per cent.
“There is mounting hope that Greek officials will soon be able to secure multi-agency bailout funds and strike a deal to avoid a disorderly default,” said Jim Cunningham at Schaeffer’s Investment Research.
The euro meanwhile was easier at $1.3250 from $1.3261 in New York late Tuesday, giving up early gains as the wait for news from Athens dragged on. Valentin Marinov, analyst at CitiFX, said that investors were following Greek developments closely in the absence of any other major news lead, with no economic indicators due.
At the same time, investors were waiting on meetings of the European Central Bank and Bank of England, with the focus firmly on what stand they will take on further stimulus for slowing economies.
Heads of the Greek government’s socialist, conservative and far-right coalition parties went into a meeting at 1500 GMT where they were expected to approve the 50-page text of the latest debt accord. The deal would clear the way for a second rescue worth 130 billion from the EU, European Central Bank (ECB) and IMF which is vital if Greece is to avert a debt default next month.
Asian markets closed higher earlier yesterday, tracking overnight gains on Wall Street. Tokyo gained 1.10 per cent, Hong Kong was up 1.54 per cent and Shanghai jumped 2.43 per cent while Sydney added 0.40 per cent.