European markets take Greek uncertainty in stride

GMT 13:36 2015 Wednesday ,03 June

Arab Today, arab today European markets take Greek uncertainty in stride

London's benchmark FTSE 100 index was flat
Paris - AFP

European markets held steady or firmed on Wednesday, shrugging off deep cuts to global growth forecasts as well as mounting uncertainty over a deal to prevent Greece from defaulting.

Approaching midday, London's benchmark FTSE 100 index was flat at 6,928.08 points.

The CAC 40 in Paris climbed 0.25 percent to 5,016.90 points and Frankfurt the DAX 30 rose 0.40 percent to 11,374.18.

The euro slid to $1.1123 from $1.1152 late on Tuesday.

"I continue to watch global markets with unwanted but justifiable pessimism – the level of complacency in global equity markets is a concern of the highest level," said Market Strategist Evan Lucas at IG trading company in a note to clients.

"Although the macro risks are to the downside the momentum in both the US and European equity markets remains to the upside."

The OECD on Wednesday chopped its forecasts and now sees the global economy growing by 3.1 percent this year instead of the 4.0 percent it predicted just over two months ago.

It slashed its forecast this year for the US economy, to 2.0 percent from 3.1 percent, although it held the outlook for the eurozone at 2.1 percent.

Meanwhile Greek Prime Minister Alexis Tsipras was headed to Brussels on Wednesday for make-or-break talks with EU Commission president Jean-Claude Juncker to reach a deal to unlock 7.2 billion euros to help Athens make a critical repayment on Friday.

But months of fractious talks have failed to produce an agreement as the EU, IMF and ECB insist that Athens undertake greater reforms to get the bailout money, which Greece's anti-austerity government has refused to match.

Without a deal by the end of this week, fears are growing that Greece could default, possibly setting off a chain reaction that could end with a messy exit from the eurozone and cause havoc to the economy in Europe and the world.

Although both sides have come up with new proposals in recent days, the head of the eurozone finance ministers, Jeroen Dijsselbloem, said Tuesday the Greek proposals did not go far enough and they would not meet Greece "half way".

Senior Market Analyst Craig Erlam at currency trading company Oanda said he fails "to see what can be achieved from (the meeting) if both sides don’t come bearing concessions, and pretty significant ones from Greece’s perspective."

Although the creditors have insisted their latest proposals are not an ultimatum, Erlam said that may be the only way for progress to be made, with a vote or referendum in Greece to free the government from their election promises.

"Unfortunately, this only seems likely once the country is backed into a corner, either when it is about to default on its debt or when the ECB" cuts off the support that has kept Greek banks afloat, Erlam said.

"This would be a drastic and undesirable scenario for all concerned."

Analysts do not expect the ECB to make any changes to interest rates at its policy meeting on Wednesday, but investors will be watching the subsequent press conference with ECB chief Mario Draghi for clues on the possible evolution of its stimulus programme and the Greek talks.

Asian markets mostly fell Wednesday.

Tokyo slipped 0.34 percent, its second consecutive drop after the Nikkei on Monday recorded a 12th straight day of rises -- its longest rally since 1988 at the height of the country's stock market bubble.

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