Europe stocks wobble on Greek talks and oil prices

AFP/LondonEurope’s main stock markets wobbled yesterday as traders tracked Greece’s efforts to renegotiate its vast international bailout deal and crude oil prices. After spending most of the day in the red, Frankfurt’s DAX 30 index advanced to a 0.19% gain to a record high close of 10,911.32 points, and in Paris the CAC 40 rose 0.39% to 4,696.30 points. However London’s FTSE 100 slid 0.17% to 6,860.02 points as a drop in oil prices weighed on energy stocks. Madrid slid 0.19% and Milan 0.33% on profit-taking. “Oil prices continue to dominate equity markets as Tuesday’s oil-inspired rally gets flipped on its head the next day with an oil-motivated fall,” said analyst Jasper Lawler at CMC Markets UK. After rising Tuesday on signs of falling production, oil prices fell back after US crude inventories hit a new record high since 1930 at 413.1mn barrels at the end of last week. US benchmark West Texas Intermediate (WTI) for delivery in March tumbled $2.92 to $50.13 a barrel compared with Tuesday’s close. Brent North Sea crude for March shed $2.05 a barrel to trade at $55.87 in London afternoon trade. Investors also tracked efforts by Greece’s new government to drum up support for a renegotiation of the country’s €240bn ($270bn) international rescue. Greek Prime Minister Alexis Tsipras met European Commission president Jean-Claude Juncker and French President Francois Hollande. A Greek government source said Tsipras and Juncker had discussed plans to “jointly” create a four-year reform plan for Greece. Finance Minister Yanis Varoufakis held talks with European Central Bank president Mario Draghi in Frankfurt, but it was unclear whether the ECB will continue its exceptional support for Greek banks or agree to any of the measures sought by Athens to ease its budgetary strain. Varoufakis said he had held a “very fruitful discussion and exchange” with Draghi, “which gives me a great deal of encouragement for the future”. In the run-up to the meetings, a report in the Financial Times had suggested that Draghi would take a tough line with Varoufakis and could even block a key element in Athens’ plans to renegotiate its bailout. “The euro came under renewed pressure to retest 1.14 against the dollar as investors remained cautious regarding the ongoing discussions of Greek prime minister with the other European leaders and the ECB,” said analyst Myrto Sokou at Sucden Research. The euro declined to $1.1423 at 1700 GMT from $1.1479 late in New York on Tuesday. Back in Athens, the new Greek government held its first bond auction since taking office, raising 812.5mn euros in six-month treasury bills on a higher rate than last month. The rate was 2.75%, compared with 2.30% secured on comparable bonds issued on January 7. The sale, which was watched closely as an indication of investor confidence in the new government, attracted less interest than previously. But Greek stocks still managed a 0.89% gain yesterday after having soared over 11% on Tuesday. On the corporate front, European pay-TV broadcasting giant Sky saw its share price climb 1.33% to 955.50 pence after posting soaring half-year profits. The biggest loser was brokerage Hargreaves Lansdown, which slid 7.56% to 966 pence on falling interim earnings. Energy stocks were also punished. Tullow Oil fell 5.15% to 395.9 pence, Royal Dutch Shell’s A share lost 1.06% to 2,157 pence and BP shed 1.0% to 445.35 pence. In Paris, shares in LVMH shot up 8.13% to €156.25 after the luxury group saw sales rise 6% last year to €30.6bn. Investors looked past the fact that if exceptional items were excluded, the company that makes Louis Vuitton handbags and Moet & Chandon champagne saw net and operational profit fall. US stocks were trying to push firmly upwards in midday trading yesterday. The Dow Jones Industrial Average was up 0.32% to 17,722.56 points, helped by positive earnings by General Motors and Disney. But the broader S&P 500 slipped 0.01% to 2,049.82, while the tech-rich Nasdaq Composite Index edged up 0.05% to 4,730.09.