European stock markets mixed while euro falls, with focus on Greece’s debt

European equities traded mixed yesterday, while the euro lost ground against the dollar, with concerns over Greece’s debt mountain playing against weaker than expected US trade data.

London’s FTSE 100 index of leading shares lost 0.71 per cent to end the day at 5,976 points, continuing a seesaw week. In Frankfurt the DAX also gave up ground, down 0.09 per cent to 7,495,05 points.

However in Paris, the CAC 40 rose, closing up 0.14 per cent at 4.058,08 points.”The concern over any eventual restructuring of Greek debt and of a global economic slowdown” kept the French gains to low levels, said Isabelle Enos at BNP Paribas.

The common European currency was dragged further down by the uncertainties surrounding the more fragile economies in the eurozone, falling to $1.4299 from $1.4410 in late trading last Tuesday.

The euro also fell against the Japanese currency, down to 115.59 yen from 116.50 the previous day.”The single currency remains constrained by sovereign debt concerns on a day when a general strike in Greece has brought the country to a standstill,” said Michael Hewson at CMC Markets in London.

In Athens police clashed with protesters near the Greek parliament on yesterday as thousands demonstrated against a new wave of austerity cuts designed to keep the country’s sinking economy above water. At least 14 people were injured according to reports, and police said they had detained 24 people for questioning.

Greece last year pledged to put its economy in order after taking a €110-billion ($158-billion) loan from the European Union and International Monetary Fund to avert insolvency when its borrowing costs went through the roof.

However its overall debt has exploded to €340 billion, leading to mounting speculation – even from Greek officials – that it will need alternative options to keep up with repayments when the EU-IMF loan runs out in 2013.

Traders are attempting to see “whether the eurozone problems warrant further declines for the single currency or if this recent weakness is a buying opportunity,” said Simon Denham at Capital Spreads.

The chief drag on the London stock index, Europe’s largest, was the oil and gas sector, with oil prices dropping, according to Hewson. Mining stocks were also effected as other commodities, including copper prices, fell.