European stocks closed narrowly mixed yesterday as the markets kept a wary eye on new developments in Greece where the government meets soon on another set of tough and un­popular austerity measures.

The Greece situation continues to be watched carefully by investors

Dealers said that after so much wrangling and disputes, and countless reports that an accord to save Greece from default was near, the markets were cautious and weary at the same time.

In London, the FTSE 100 index of leading shares closed virtually unchanged at 5,890.26 points.

In Paris, the CAC-40 index gained 0.18 per cent at 3,411.54 points but in Frankfurt the DAX 30 slipped 0.16 per cent to 6,754.20 points.

Comments that a Greek eurozone exit would not sink the single currency union by European Commission vice president Neelie Kroes appeared to reflect a growing point of view but her boss, Commission head José Manuel Barroso, was quick to insist that Athens would stick with the unit.

“We want Greece in the euro,” Mr Barroso said. “The cost of a Greek exit from the eurozone would be higher than the cost of continuing to support Greece.”

He said Greece was “very close” to an agreement on a debt rescue package, which includes a new bailout and banks taking losses on their bond holdings.

Greek Prime Minister Lucas Papademos was due yesterday to meet heads of the socialist, conservative and far-right parties that form his unwieldy coalition, for talks on avoiding a debt default.

However, the meeting was postponed for today.

News that commodities trader Glencore and mining group Xstrata had agreed to a $90 billion merger failed to have much of an impact, with the focus turning to whether regulators will clear the deal.

In New York, stocks opened lower as traders awaited fresh testimony from Federal Reserve chief Ben Bernanke to Congress on the economy and watched efforts to resolve the Greek debt crisis.

They then turned slightly firmer after data pointed to continued job creation, confirming recent figures which showed the US labour market to be recovering steadily.

The blue-chip Dow Jones Industrial Average was up 0.25 per cent at around 1645 GMT and the Nasdaq Composite put on 0.20 per cent.

Patrick O’Hare at Briefing.com said the lack of buying conviction was seen as “a sense of reserve” ahead of Fed chairman Bernanke’s testimony to the Senate Budget Committee at 10 a.m.

The weak sentiment also appeared a result of “the same old, same old with Greece – which is to say there is still a lot of talk and no definitive resolution to the bailout agreement,” he said.

The euro was firmer, rising to $1.3183 from $1.3129 in New York late Monday.

“Greek worries are once again acting as the main drag on shares,” said IG Index dealer Rupert Osborne.

“We continue to await news from Athens and investors are switching to defensive stocks as news of a Greek deal continues to elude us.”

Mr Osborne said that “confirmation of the terms of Glencore’s bid for Xstrata has done nothing to lift the mining sector.”

“The Greece situation continues to be watched carefully by investors, though the fact that we have not seen a large correction in stock prices thus far indicates that they remain confident that despite the wrangling and delays, an agreement will arise,” said Joshua Raymond, chief market strategist at City Index traders.

In Asian trade, Tokyo lost 0.13 per cent, Hong Kong slipped 0.05 per cent, Shanghai dropped 1.68 per cent and Sydney shed 0.50 per cent.

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