US stocks dipped yesterday while German bond yields rose as investors searched for clarity over whether a high-level meeting on Greece’s debt crisis might yield a significant breakthrough.
The euro rose nearly two per cent against the dollar, after an above-forecast rise in eurozone inflation pushed the currency through the $1.10 resistance point.
Greece’s creditors are close to finishing a draft agreement to put to the leftist government in Athens, a source close to the talks said yesterday, injecting new momentum into long-running negotiations to release aid for the cash-strapped country.
Yannis Stournaras, the head of the Greek central bank, said an agreement between Athens and its creditors from the eurozone and International Monetary Fund to keep the country afloat was “not far away”.
“It is all revolving around the climactic situation in Europe,” said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.
“I really think there is going to be some clarity to it today, they are going to push the envelope and that is what the market is focusing on.”
Athens is due to make a 300 million euro debt repayment to the International Monetary Fund on Friday.
US stocks were modestly lower after economic data showed new orders for US factory goods unexpectedly fell in April, the eighth decline in the last nine months.
Investors were also closely watching the technical support level at the 50-day moving average for the S&P 500 at 2,099.54. The benchmark index touched a session low of 2,099.14 before rebounding.
The Dow Jones industrial average fell 20.28 points, or 0.11 per cent, to 18,020.09, the S&P 500 lost 2.22 points, or 0.11 per cent, to 2,109.51 and the Nasdaq Composite dropped 6.01 points, or 0.12 per cent, to 5,076.92.
MSCI’s all-country world index of the stock performance in 46 countries fell 0.11 per cent.
The pan-European FTSEurofirst 300 stock index fell 0.77 per cent. Germany's DAX was down 0.87 per cent, while the main Athens stock index slumped 2.47 per cent.
Yields on safe-haven German 10-year bonds rose 14.7 basis points to 0.677 per cent, while those on lower-rated Spanish, Italian and Portuguese debt touched their highest of the year after the data showing inflation resumed in the eurozone last month.
Prices in the eurozone rose 0.3 per cent in May, beating forecasts of a 0.2 per cent increase.
The euro was up 1.88 per cent at $1.113 while the dollar was down 1.34 per cent against a basket of major currencies.
The weaker dollar helped oil prices rise, along with expectations that OPEC producers would maintain their group production target at its current level and resist pressure for an increase. Brent crude was up 39 cents at $65.27 a barrel while US crude advanced 62 cents at $60.82.