Stocks markets around the world clung to modest gains yesterday, with European equities retreating from seven-year highs, after Germany rejected a Greek proposal to extend its bailout and as oil prices dropped.
Government borrowing costs fell across the eurozone and the euro was little changed, paring its initial losses against the yen and dollar.
Despite the German rejection, Greece's wording of a docu-ment seen by Reuters appeared to cooperate substantially with the terms laid out by eurozone finance ministers in earlier negotiations.
“At this point, investors think that even if a deal is reached, it won't mean that the 'Greek issue' will be resolved,” said Mirabaud Securities senior equity sales trader John Plassard in Geneva. “There will be serious doubts on whether Greece will fully implement the agreement.”
The Greek request for a six-month extension to its eurozone loan agreement came as it was only weeks away from running out of cash. Crucially, Greece agreed the plan would be monitored by the EU Commission, the European Central Bank and the International Monetary Fund, a retreat by Prime Minister Alexis Tsipras, who had vowed to end cooperation with 'troika' inspectors.
In midday trading, the Dow Jones industrial average was down 20.82 points, or 0.12 per cent, to 18,009.03, the S&P 500 was up 0.03 point, or 0 per cent, to 2,099.71 and the Nasdaq Composite was up 16.96 points, or 0.35 per cent, to 4,923.32.
The broader FTSEurofirst 300 index closed up 0.3 per cent at 1,520.22 after hitting a seven-year high of 1.522.25.
Tokyo's Nikkei index reached 15-year highs.
In the currency market, the euro fell 0.2 per cent against the dollar at $1.1375 after Wednesday's gains on the minutes of the Federal Reserve's January policy meeting. The dollar edged 0.14 per cent higher against a basket of major currencies after falling due to the perceived dovish minutes.
As stock markets were choppy and a report on US Mid-Atlantic factory activity fell short of expectations, investors moved some money back into safe-haven US Treasuries, cutting earlier losses due to competition from higher-yielding corporate bond supply.
Ten-year bond yields in Spain, Italy and Portugal, the countries most vulnerable to the Greek crisis, fell four to seven basis points to 1.55 per cent, 1.60 per cent and 2.25 per cent respectively. In oil markets, benchmark Brent crude futures for April were down 57 cents, or 0.94 per cent, at $59.95 a barrel. US crude was last down 99 cents, or 1.99 per cent, at $51.15. Oil pared its earlier drop after government data showed a smaller increase in weekly build in US crude inventories than a private report had shown late Wednesday. Spot gold prices fell $1.05 or 0.09 per cent, to $1,211.56 an ounce.