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European shares dropped on Friday, setting a regional index on course for its steepest weekly fall so far this year as the Athens stock market slid after Greece delayed a debt payment.
Greece’s benchmark Athex General Composite (ATG) index tumbled 4.7 per cent, underperforming a 1 per cent decline on the pan-European FTSEurofirst 300 index, which was on track for its biggest weekly decline since December.
Switzerland’s Syngenta was among the worst performers on the FTSEurofirst, retreating 2.8 per cent on worries about regulatory hurdles for its deal with US agrochemicals firm Monsanto.
Greece delayed the payment to the International Monetary Fund, due on Friday, as Prime Minister Alexis Tsipras demanded changes to tough terms from international creditors for aid to stave off default.
The lingering uncertainty over Greece’s debt problems has come against a volatile market backdrop in which yields on German Bunds rose to eight-month highs earlier this week.
Mike Reuter, a trader at brokerage Tradition, backed staying “short’’ — namely betting on further falls — on equities while the Greek situation remained unclear.
London Capital Group’s head analyst Brenda Kelly added that investors remained unconvinced by the Greek government.
“Assurances from Prime Minister Tsipras that Greece will remain in the euro have not exactly soothed investor sentiment today,’’ said Kelly.
US data
Investors were also awaiting US jobs data, due at 1230 GMT and expected to underpin expectations of a rate hike as early as September.
This would probably further lift bond yields across the world but might benefit euro zone shares by pushing down the euro on currency markets, traders said, with a weak euro typically good for European exporters.
Economists polled by Reuters expect May’s non-farm payrolls report to show US employers added 225,000 jobs.
“It’s going to have to be higher than 300,000 to reawaken thoughts of a June (US rate) hike,’’ said Andy Ash, head of sales at ADM Investor Services.
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