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European Stocks Calmer on Decisive Day for Greece Global Stocks Calmer on Decisive Day for Greece
(about 1 hour later)
PARIS — Hopes that Prime Minister Alexis Tsipras of Greece might still somehow reach a last-minute deal with his country’s international creditors helped to calm European markets on Tuesday, as investors watched to see if Athens would make a critical loan repayment to the International Monetary Fund. PARIS — Global stock markets stabilized on Tuesday amid hope that Prime Minister Alexis Tsipras of Greece might still reach a last-minute deal with his country’s international creditors, as investors watched to see if Athens would make a critical loan repayment to the International Monetary Fund.
Markets had fallen across the world on Monday, after the Greece government said that a referendum would be held on Sunday on whether to accept the bailout terms offered by the so-called troika of international lenders: the I.M.F., the European Central Bank and the group representing European Union member states. Greece was facing a Tuesday deadline to repay roughly 1.6 billion euros, or $1.8 billion, to the I.M.F.Markets had fallen across the world on Monday, after the Greece government said that a referendum would be held on Sunday on whether to accept the bailout terms offered by the so-called troika of international lenders: the I.M.F., the European Central Bank and the group representing European Union member states. Greece was facing a Tuesday deadline to repay roughly 1.6 billion euros, or $1.8 billion, to the I.M.F.
In Athens on Tuesday, the Greek finance minister, Yanis Varoufakis, told reporters that Greece would not make the I.M.F. payment. But, asked whether there was still a chance that Athens would reach an aid deal with its creditors before the other key Tuesday deadline — the midnight expiration of the country’s bailout program — Mr. Varoufakis replied, “We hope so.” In Athens on Tuesday, the Greek finance minister, Yanis Varoufakis, told reporters that Greece would not make the I.M.F. payment. But when asked whether there was still a chance that Athens would reach an aid deal with its creditors before the other key Tuesday deadline — the midnight expiration of the country’s bailout program — Mr. Varoufakis replied, “We hope so.”
European stocks started the day in modestly negative territory. But expectations, fanned by rumors in Brussels and Athens that Greece was preparing to suggest a new compromise, led investors to square their bets by midday. There was a flurry of activity in Brussels and Athens on Tuesday afternoon, as Mr. Tsipras sent creditors a last-ditch proposal for a new, two-year bailout program, drawing upon a special eurozone emergency fund known as the European Stability Mechanism. But there was no clear indication of whether the country’s lenders might entertain that option.
European markets had declined at the opening, but expectations fanned by rumors in Brussels and Athens that Greece was preparing to propose a compromise led investors to square their bets as the day wore on, leaving indexes little changed.
“The big news today is that they’re still talking,” said Ronny Claeys, a strategist at KBC Asset Management in Brussels. “Nobody has shut the door on a deal, and that’s enough to calm the market.”“The big news today is that they’re still talking,” said Ronny Claeys, a strategist at KBC Asset Management in Brussels. “Nobody has shut the door on a deal, and that’s enough to calm the market.”
In early afternoon trading, the Euro Stoxx 50 index, which combines the shares of top companies in Germany, France and other countries in the eurozone, was nearly unchanged, after a 4.2 percent decline on Monday. In London, the benchmark FTSE 100 index slipped 0.6 percent, after a 2 percent decline the previous day. American markets also stabilized early. Just after the opening in New York, the Dow Jones industrial average was up 0.3 percent, while the Standard & Poor’s 500 index was up 0.6 percent. The Dow had fallen about 2 percent on Monday, putting it into negative territory for the year.
The Euro Stoxx 50 index, which combines the shares of top companies in Germany, France and other countries in the eurozone, slipped 0.1 percent on Tuesday, after a 4.2 percent decline on Monday. In London, the benchmark FTSE 100 index fell 0.7 percent, after a 2 percent decline the previous day.
With investors focused on the crisis in Greece, there was little market reaction to official data on Tuesday that showed consumer prices in the eurozone had risen 0.2 percent in June compared with a year earlier, and that the jobless rate in the same group of countries was little changed at 11.1 percent in May.With investors focused on the crisis in Greece, there was little market reaction to official data on Tuesday that showed consumer prices in the eurozone had risen 0.2 percent in June compared with a year earlier, and that the jobless rate in the same group of countries was little changed at 11.1 percent in May.
The bond market calmed after deep declines on Monday in which investors dumped the sovereign debt of so-called peripheral eurozone countries like Italy, Portugal and Spain, which are seen as the most vulnerable to market turmoil if Greece defaults. On Tuesday, bond yields, which move in the opposite direction to prices, fell across most of the eurozone as tensions eased.The bond market calmed after deep declines on Monday in which investors dumped the sovereign debt of so-called peripheral eurozone countries like Italy, Portugal and Spain, which are seen as the most vulnerable to market turmoil if Greece defaults. On Tuesday, bond yields, which move in the opposite direction to prices, fell across most of the eurozone as tensions eased.
The main exception, however, was the debt of Greece itself, which continued to trade at elevated levels, suggesting that investors believed default was a possibility.The main exception, however, was the debt of Greece itself, which continued to trade at elevated levels, suggesting that investors believed default was a possibility.
Capital controls announced on Sunday mean that Greek banks and markets will remain mostly closed until next week. The Finance Ministry in Athens said on Tuesday that Greece would open about 1,000 bank branches beginning on Wednesday so that retirees without cards for A.T.M.s could withdraw limited amounts of cash.Capital controls announced on Sunday mean that Greek banks and markets will remain mostly closed until next week. The Finance Ministry in Athens said on Tuesday that Greece would open about 1,000 bank branches beginning on Wednesday so that retirees without cards for A.T.M.s could withdraw limited amounts of cash.
Trading in Standard & Poor’s 500 index futures suggested stocks on Wall Street would open slightly higher. The S&P 500 fell 2.1 percent on Monday. The euro fell 0.3 percent against the dollar, to $1.1204, well within its recent trading range.
The euro fell 0.5 percent against the dollar, to $1.1177, well within its recent trading range.
Earlier on Tuesday, Asian markets bounced back strongly. In China, where key indexes have gained more than 100 percent over the past year, the Shanghai composite index rose 5.5 percent, after falling more than 3 percent on Monday. The Tokyo benchmark Nikkei 225 stock average rose 0.6 percent.Earlier on Tuesday, Asian markets bounced back strongly. In China, where key indexes have gained more than 100 percent over the past year, the Shanghai composite index rose 5.5 percent, after falling more than 3 percent on Monday. The Tokyo benchmark Nikkei 225 stock average rose 0.6 percent.