Europe stocks stumble, dollar lifted by U.S rate view

Mon May 25, 2015 2:09pm EDT
 
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By Emelia Sithole-Matarise

LONDON (Reuters) - European shares fell in thin trade on Monday while the dollar powered ahead after U.S. Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year.

Investor concerns about Greece's debt problems and a poor regional and local election result by Spain's ruling People's Party also weighed on the euro and European shares.

The pull-back in European stocks mirrored losses on Wall Street on Friday after Yellen suggested the Fed was ready to act if the economy kept improving as expected, though a raft of recent data has suggested it is growing only modestly in the second quarter. She said delaying a policy tightening until employment and inflation hit its targets risked overheating the economy.

The benchmark French CAC 40 index shed 0.8 percent. Trading volumes were thin as several markets including Germany, the United Kingdom and the United States were shut for holidays.

Spain's IBEX equity index fell 2.3 percent after voters in regional and local elections on Sunday punished Prime Minister Mariano Rajoy's ruling PP for four years of austerity while Greece's ATG share index fell 2 percent.

"The Greek debt warning and the Spanish election outcome are weighing on the markets, said Naeem Aslam, chief market analyst at AvaTrade.

After four months of talks with its euro zone partners and the IMF, Greece's leftist-led Syriza government is still scrambling for a deal that could release up to 7.2 billion euros ($7.9 billion) in remaining aid to avert bankruptcy.

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Traders work at their screens at the stock exchange in Frankfurt January 23, 2015. REUTERS/Pawel Kopczynski