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Stocks and euro decline pending Greek debt deal

Europe’s main stock markets dropped and the euro fell versus the dollar yesterday as investors waited to see whether Greece would strike a crucial debt deal.

Indices were down after closing sharply higher on Friday in the wake of upbeat US jobs data.

Approaching midday in London, the benchmark FTSE 100 index slipped 0.32 per cent to 5,882.10 points, Frankfurt’s DAX 30 lost 0.55 per cent to 6,729.18 points and in Paris the CAC 40 slid 1.07 per cent to 3,391.08 points.

The euro retreated to $1.3055 from $1.3156 on Friday.

“Greece’s finances remain the main focus of market concern and the weekend didn’t appear to bring the much-promised resolution any closer, with still no real signs of an imminent agreement on the new €130 billion bailout that the country needs to avoid a default in March,” said Michael Hewson, an analyst at CMC Markets.

Greek Prime Minister Lucas Papademos faced more cliffhanger talks yesterday with European Union and International Monetary Fund officials, and coalition partners as a deadline for crucial debt relief drew closer.

Papademos was to meet representatives from the EU, European Central Bank and IMF and then later receive heads of the Greek socialist, conservative, and far-right parties who support his coalition government, the premier’s office said.

Greece is trying to wrap up three weeks of tough negotiations to avoid a historic default in mid-March that could disrupt the 17-nation eurozone and possibly hobble a global economic recovery.

After five hours of talks on Sunday, Papademos noted agreement on a state savings target of 1.5 per cent of gross domestic product that included the implementation of reforms to lower production costs and a scheme to recapitalise Greek banks. Other issues remained unresolved, however, putting in doubt an overall deal.

The Dow Jones Industrial Average closed up 1.23 per cent on Friday in response to the jobs data to hit its highest closing level since May 2008.

Asian stock markets mostly rose yesterday, tracking the gains on Wall Street. Tokyo rose 1.10 per cent and Sydney added 1.05 per cent but Hong Kong edged down 0.23 per cent.

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