Stocks reverse losses as investors keep faith in Greek deal
By Lionel Laurent
LONDON (Reuters) - European stocks reversed early losses on Tuesday and yields on lower-rated euro zone bonds fell as investors reassessed the collapse of Greek debt talks and focused on the prospects of a deal.
The euro also recovered from early losses to rise against the dollar after Monday's breakdown of talks between Greece and euro zone finance ministers. Initial declines on equity markets were modest.
"For now, we assume that logic will prevail and this movie won't end in disaster," said Paul O’Connor, co-head of the multi-asset desk at Henderson Global Investors.
Both the euro zone and Greece raised the possibility of another attempt to find common ground before the end of this week. The European Central Bank is set to decide on Wednesday whether to maintain emergency lending to Greek banks, and the Greek state faces some heavy loan repayments in March.
Dutch Finance Minister Jeroen Dijsselbloem, who chairs the group of euro zone ministers, gave Athens until Friday to request an extension of its current bailout, which would otherwise expire at the end of the month.
The pan-European FTSEurofirst 300 .FTEU3 equity index opened lower but was up 0.1 percent at 1300 GMT (08:00 a.m. EST). U.S. shares were expected to open flat to lower, according to index futures SPc1DJc1.
Greek stocks underperformed. The volatile ATG main Athens share index .ATG was down 0.7 percent, after earlier dropping more than 4 percent and then briefly turning positive.
Yields on three-year Greek government bonds GR0029312=TWEB rose 83 basis points to 18.54 percent and 10-year yields GR10YT=TWEB rose 63 bps to 10.55 percent. Continued...