ROME: European markets drifted lower Wednesday, with investors nervously awaiting a crunch meeting on the future of financial aid to Greece.
With Greece’s current bailout due to expire at the end of the month, concerns that a showdown between the New Greek government and its international creditors could trigger the country’s exit from the eurozone have gripped markets in recent days.
On Tuesday, stocks in Greece and Europe gained more broadly, as hopes grew that a deal can be reached at Wednesday’s meeting of eurozone finance ministers in Brussels. See: Germany quashes hopes of quick Greek debt accord
The Syriza-led Greek government wants its partners to give it time and financial leeway to renegotiate the terms of its bailout.
Equity markets edged lower in Europe, with the Stoxx Europe 600 index SXXP, -0.24% falling 0.2%. Athens’s main stock index GD, -4.02% was down 4.2%, after climbing 8% on Tuesday.
Ahead of the month-end deadline, markets “are likely to remain volatile as the path to either a last-minute solution or, in our minds, the very small possibility of a Greek exit from the eurozone are likely to look very much the same apart from the final act,” said fixed-income strategists at Rabobank.
Greek government bonds were steady ahead of the meeting, with the 10-year yield rising to 10.68%.
Currency markets were largely quiet, with the euro EURUSD, -0.19% edging 0.2% lower to $1.1298 against the dollar.
“The FX market is likely to be dominated by tactical positioning today [Wednesday] in view of a day low on data but full of political tension,” said Esther Reichelt, a currency strategist at Commerzbank.
Germany’s DAX index DAX, -0.02% was flat, and France’s CAC PX1, -0.35% was down 0.3% ahead of the Eurogroup meeting. Outside the eurozone, the U.K.’s FTSE 100 index UKX, -0.16% was 0.5% lower.
