European shares dropped at the open Thursday, ahead of a summit
at which finance chiefs are expected t o address an impasse in
negotiations between Greece and its creditors.
The Stoxx Europe 600 lost 0.6% in early trade, while Germany's
DAX-30 declined 0.7% and France's CAC-40 fell 0.5%. In the U.K., he
FTSE 100 was 0.2% lower. Athens' main index was up 0.4% shortly
after the open but is down more than 17% so far in June alone.
Greece's central bank, in an unusually sharp statement that set
it squarely against the government, warned Wednesday that failure
to clinch a deal with international creditors on desperately needed
funding could spell a catastrophe for Greece.
Last weekend, talks between Greece and its European creditors
collapsed when European officials dismissed the Greek government's
latest proposals.
Barclays economists wrote in a note that "progress toward an
agreement [on Thursday] is unlikely" while strategists at Rabobank
said the situation around Greece seems to be going "from bad to
worse."
Citigroup strategists note however that even if no deal is
struck immediately, "the gathering is likely to be used to identify
the outstanding items to close an interim deal and unlock the
negotiations, paving the way for a potential political-level
agreement by the end of the week."
In debt markets, bonds in southern Europe, an area that tends to
be post vulnerable to Greek shocks, were broadly steady in early
trade.
The yield on the 10-year Spanish benchmark bond was at 2.31%,
while that on the Italian 10-year benchmark bond was at 2.30%.
Yields fall as bond prices rise.
The yield on the 10-year German bond was slightly lower on the
day at 0.77%. Greek two-year benchmark bonds were trading with a
yield of over 29%. The yield on the 10-year bonds was at
12.80%.
The euro was broadly steady against the dollar at $1.135. The
dollar fell late Wednesday after the U.S. Federal Reserve signaled
that it is likely to go slow with any interest-rate increases. U.S.
stocks ended slightly higher Wednesday.
Brent crude was 0.5% lower at $63.58 early Thursday. Gold rose
0.9% to $1,187.40.
Write to Josie Cox at josie.cox@wsj.com
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