LONDON: European stocks traded mixed on Wednesday, as shareholders digested the latest batch of corporate earnings and closely followed developments in Greece’s debt negotiations.
The Stoxx Europe 600 index SXXP, -0.17% inched 0.1% down to 369.95, after closing higher for a second straight day on Tuesday. France’s CAC 40 index PX1, -0.37% rose 0.1% to 4,683.65, the U.K.’s FTSE 100 index UKX, -0.49% slipped 0.1% to 6,864.96, while Germany’s DAX 30 index DAX, -0.65% dropped 0.2% to 10,832.38.
Greece’s Athex Composite index GD, -2.54% slipped 0.3% to 838.21, after surging 11% on Tuesday on news the country’s new government was backing down on demands for a haircut on debt.
The new government in Greece remained in the spotlight on Wednesday as both Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis continued their separate European tours to drum up support for a debt deal with greater leniency on repayments.
Tsipras met with European Commission President Jean-Claude Juncker on his first trip to Brussels after taking office last week. Meanwhile, Varoufakis discussed the bailout terms with European Central Bank President Mario Draghi, saying they had a “fruitful” conversation, according to media reports. Varoufakis will meet German counterpart Wolfgang Schauble in Berlin on Thursday.
“Welcome to the real world. The Greek government will get a first real taste of it in the next 48 hours,” said Christian Schulz, senior economist at Berenberg, in a note. “Technically, the ECB meeting might be the most crucial.”
The ECB is set to decide whether it will continue the emergency liquidity assistance (ELA) to Greek banks that was granted in January ahead of the general election. Without this financing, the banks could feel a liquidity squeeze due to an increase in deposit outflows.
“Draghi is likely to explain the rules to Varoufakis: the ECB may extend the ELAs to the end of the month, but not beyond unless the bailout is formally extended by the eurozone finance ministers on 16 February and ratified by eurozone government and/or parliaments thereafter,” Schulz said.
