European shares fell yesterday as renewed concerns over Greece’s finances weighed on the region's stock markets.
Athens’s benchmark ATG equity index fell 3.9 per cent on worries over a deadlock in Greece's attempts to strike a deal with its international creditors.
Greece stepped up diplomatic efforts with its eurozone partners yesterday to avoid running out of money this month, when it must make a big debt repayment to the International Monetary Fund (IMF) as cash reserves dry up.
Talks continued with the IMF, European Commission and European Central Bank on a cash-for-reform deal, but serious differences remained over pensions, labour reform and the minimum wage.
“Greece is not going to get sorted out any time soon. At the moment, I'm more bearish than bullish and I would sell on any stock market rally,” said Terry Torrison, managing director at Monaco-based McLaren Securities.
Stock markets also came under pressure after the US trade deficit grew in March to its widest in nearly six and a half years, suggesting the economy contracted in the first quarter.
The pan-European FTSEurofirst 300 index, which reached its highest level in more than 14 years last month, closed down 1.6 per cent at 1,555.46 points.
Germany's DAX, which also hit record highs last month, fell 2.5 per cent while France's CAC dropped 2.1 per cent.
Spanish insurer Mapfre fell 6.5 per cent, the worst performer on the FTSEurofirst, after reporting a drop in first-quarter profit.
UBS rose 3.8 per cent after the Swiss bank posted its highest quarterly profit in nearly five years. Many traders said economic stimulus measures by the European Central Bank (ECB) were limiting damage to European stock markets from uncertainty over Greece.
Record-low interest rates, coupled with ECB plans to buy government bonds, have pushed investors to the better returns available from stocks.
The FTSEurofirst 300 index remains up by around 14 per cent since the start of 2015. The DAX is up 16 per cent.
“The Greeks are not playing ball particularly well, but there's still a feeling among investors that they will somehow muddle through and arrive at another deal,” said Hantec Markets analyst Richard Perry.