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Worries over Greece’s future in the euro zone kept shares under pressure on Monday, even as fresh multi-year lows for the euro and crude oil gave a boost to travel and consumer goods stocks.
The pan-European FTSEurofirst 300 index was down 0.1 per cent at 0909 GMT, with benchmark indexes in London and Frankfurt also in negative territory. The Paris CAC 40 stayed flat.
Political uncertainty in Greece was firmly in the spotlight ahead of elections later this month, as German Vice-Chancellor Sigmar Gabriel said the German government wanted Greece to stay in the euro zone.
The Athens ATG index fell 2 per cent, with lenders Bank of Piraeus and Alpha Bank down 3.1 to 3.6 per cent.
The January 25 election in Greece could vault the left-wing Syriza party into power, raising the risk of a sovereign default and severe losses for the European Central Bank on any Greek bonds it holds.
“I still think that the Greek exit scenario is an outlier,’’ said Michael Hewson, analyst at CMC Markets. “Any sensible strategy would be to plan for the worst and hope for the best.’’
Asian shares were also subdued as soft manufacturing surveys soured the mood. The euro hit a nine-year low versus the dollar, with investors stepping up bets the European Central Bank would unveil long-awaited extra stimulus measures in a bid to boost the economy and quash fears of a deflationary spiral.
The travel and leisure sector in Europe was up 1 per cent, lifted by the prospect of cheaper oil and a weaker euro feeding improving companies' and consumers' finances.
Airline Ryanair rose 3 per cent, hitting an all-time high after the company said December traffic grew 20 per cent.
Italian eyewear company Luxottica rose 2.7 per cent, also hitting an all-time high, after it was cited by La Stampa as saying it would benefit from a weaker euro/dollar exchange rate in its fourth-quarter results.
The battered energy sector, meanwhile, took a hit from oil’s slide, with the STOXX Europe oil and gas index down 1.5 per cent.
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