By Tommy Stubbington and Josie Cox
European stocks finished largely flat Wednesday, as investors
weighed a slight easing of tensions in Greek markets against some
mixed corporate earnings.
The Stoxx Europe 600 ended little-changed, having swung between
small gains and losses during the session.
France's CAC 40 index rose 0.4%, Germany's DAX lost 0.6%, while
the U.K.'s FTSE 100 closed 0.5% lower.
Tesco PLC was among the biggest decliners, having given up early
gains after the retailer reported a huge full-year loss amid a raft
of charges, capping the most tumultuous year in its 96-year
history.
Kone shares also fell sharply after the Finnish engineering firm
posted disappointing first-quarter results.
Roche Holding AG climbed after the Swiss drug giant said strong
growth of its core cancer franchise pushed sales 3% higher in the
first quarter of the year. It confirmed its full-year guidance and
suggested it would raise its dividend. Shares in Rolls-Royce
Holdings also climbed sharply on news of a leadership change.
"Consensus forecasts for this European corporate reporting
season look pretty demanding, but investors appear relaxed that
their expectations will be met," said Ian Williams, economist and
strategist at brokerage Peel Hunt.
Shares in Greek banks also rebounded along with Greek government
bonds after heavy declines in recent days, as optimism increased
that Athens may yet hammer out a deal with creditors to unlock
further financing.
European Central Bank executive board member Benoît Coeuré told
a Greek newspaper Wednesday that the ECB would continue to fund
Greek banks as long as they stay solvent, but that the current
situation in Greece is "clearly not sustainable" and that "quick
and decisive action" was necessary.
Greek Prime Minister Alexis Tsipras is expected to meet with
German Chancellor Angela Merkel at a summit in Brussels on
Thursday, before eurozone finance ministers meet in Riga, Latvia,
on Friday.
A deal on fresh aid, however, is unlikely to be agreed before
the Eurogroup meeting on May 11, a day before Greece must pay
EUR780 million ($838 million) due to the International Monetary
Fund.
The Athex composite stock index rose 2.1%, with banks leading
the way. It remains 13% lower since the start of the year. In bond
markets, Greece's 10-year yield fell sharply to 12.6%. Two-year
yields fell more than two percentage points to 26.7%. Yield rise as
bond prices fall.
Still, Greek bond yields remain alarmingly high and a so-called
inverted curve, where longer dated bonds yield less than those that
are due for repayment sooner, indicates that investors are
factoring in a sharply heightened probability of default.
"Given no discernible reform progress at technical or political
levels, we expect both of these occasions to be nonevents that mark
another missed opportunity for Greece to avoid a descent into
financial oblivion, " said Emily Nicol, economist at Daiwa Capital
Markets.
German 10-year bond yields rose to 0.16%, having touched an
all-time low of 0.05% earlier this week.
Gold fell 1.2% to at $1,188 an ounce, while Brent crude was 1.1%
higher at $62.75 a barrel.
In currency markets, the euro fell 0.1% against the dollar to
$1.0724. Sterling rose 0.7% against the buck after the Bank of
England's April meeting minutes showed two monetary policy
committee members regarded leaving rates unchanged as a "finely
balanced" decision.
Write to Tommy Stubbington at tommy.stubbington@wsj.com and
Josie Cox at josie.cox@wsj.com
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