European shares fall as hopes of imminent Greek deal recede

Reuters London | Updated on January 24, 2018

European shares fell on Thursday, with the Athens bourse touching three-year lows as the prospects of Greece reaching a quick deal with its international creditors faded.

Athens' benchmark ATG equity index fell 1.8 per cent as the likelihood of a breakthrough on Greece at Thursday's gathering of European finance ministers looked increasingly remote.

Greece must find a way out of the impasse by the end of June, when it faces a €1.6 billion ($1.8 billion) repayment due to the International Monetary Fund, potentially leaving it bankrupt and on the verge of exiting the euro zone.

The pan-European FTSEurofirst 300 index was down 0.8 per cent, while Germany's DAX and France's CAC also retreated 0.9 per cent.

While the Greek market is down nearly 20 per cent since the start of 2015, the FTSEurofirst remains up by around 10 per cent, partly due to economic stimulus measures from the European Central Bank (ECB).

Mike Reuter, a trader at Tradition, said that while the Greek worries were causing some investors to trim back European equity holdings in the short-term, the longer-term outlook looked more stable given the backdrop of the ECB's support.

"People are starting to get worried and there is a bit of taking risk off. But there is still support for the market for the next four to five weeks," he said.

German software maker SAP was one of the biggest drags on the FTSEurofirst, as SAP fell 1.7 per cent after rival Oracle forecast quarterly profit below analysts' estimates.

German engineering services company Bilfinger also slumped 16 per cent after a new profit warning.

However, mining stocks outperformed. The sector was boosted by firmer copper prices, which advanced partly due to a retreat in the US dollar on currency markets after investors pushed back expectations of a US rate hike to December from an earlier September target.

A weaker US dollar is often good for miners as it makes metals more affordable for buyers holding currencies other than the dollar.

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Published on June 18, 2015
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