Eurozone finance ministers are meeting to discuss financial aid terms for Athens
The euro slipped and European stocks paused from their recent rally Monday amid renewed concern over Greece’s future in the eurozone.
Ahead of a meeting of eurozone finance ministers in Brussels to discuss the terms of future financial aid for Athens, the common currency fell 0.5% against the dollar to $1.1163, its weakest level in a week.
“Uncertainty over Greece is back to the forefront,” said currency strategists at Citigroup.
In equity markets, the Stoxx Europe 600 was 0.1% lower, as investors weighed Greek concerns against a Chinese interest rate cut that boosted stocks in Asia. The European index had risen sharply on Friday, boosted by an unexpectedly clear outcome to last week’s U.K. general election and a recovery in U.S. job growth.
But the focus returned to Greece, with few analysts expecting a breakthrough at Monday’s meeting and with a Greek payment to the International Monetary Fund due Tuesday.
Adding to the nerves, a senior IMF official said Sunday the fund is working with authorities in some of Greece’s neighbors on contingency plans for a Greek default, a rare public admission that talks could fail.
“The talks between the Greek government and its international partners are entering a crucial phase, overshadowed by a precarious fiscal situation, heavy debt redemptions, and concerns about the stability of the banking system,” analysts at UBS said.
UBS expects a deal between Athens and its creditors to be reached, but added that failure to hammer out an agreement in the coming weeks could put Greece on a “slippery slope” toward exit from the euro area.
Germany’s DAX index was 0.5% lower. France’s CAC 40 fell 1.4%, weighed down by a sharp decline in Airbus shares after a military transport plane built by the firm crashed in Spain on Saturday.
Mining shares, which are highly sensitive to Chinese demand, were the best-performing sector on the Stoxx 600, rising 1.7% after the easing from the People’s Bank of China.
That helped the U.K.’s resource-heavy FTSE 100 rise 0.4%.
In the U.S., stock futures indicated a 0.1% opening loss for the S&P 500. Changes in futures aren’t necessarily reflected in market moves after the opening bell.
In bond markets, short-term Greek debt weakened, pushing two-year yields higher to 20.3%.
German 10-year yields were slightly higher at 0.57% as markets continued to stabilize from a turbulent weeklong selloff in eurozone bond markets.
U.K. government bond yields were also a touch higher ahead of the Bank of England’s monthly policy announcement, with the central bank expected to keep interest rates on hold.
In commodities markets, Brent crude oil was up 0.23% at $66.32 a barrel, while gold fell 0.4% to $1,183.90 an ounce.
