By Nina Bains
European stocks and the euro were mixed Wednesday as investors assessed what impact the delay in a decision on Greece’s next tranche of financial aid would have, while oil futures jumped on news of an explosion on a bus in central Tel Aviv.
It was hoped that an agreement on the next payment to Greece would be reached at a meeting of euro-zone finance ministers late Tuesday but differences between them and the International Monetary Fund resulted in any potential decision being pushed back, initially to next Monday.
The IMF is facing growing discontent among its members over the large sums being loaned to the euro zone, while Germany remains staunchly opposed to a second write-down on Greek debt.
The euro was under pressure against most major currencies following the news.
“The odds of getting Greece’s bailout program back on track have never looked more challenging–and this time euro-zone policymakers are mostly to blame,” said Nicholas Spiro, managing director at Spiro Sovereign Strategy.
“This sends an unambiguous message to Athens that while euro-zone leaders fear a Greek exit from the single currency area, they remain politically unwilling to do what’s necessary to secure Greece’s membership. While Athens is still likely to be granted its next disbursement of aid, the Greek rescue program will remain way off track for some time yet.”
European equity markets were helped off session lows after reports that German Chancellor Angela Merkel was looking at ways of easing Greece’s debt, other than accepting a loss on loans to the beleaguered country. U.S. stock futures also pared losses in line with trading in Europe.
A source familiar with the matter told Dow Jones Newswires that Germany was mulling plans to allow Athens to borrow from the bailout fund to buy back bonds from the market and to cut interest on existing loans.
Still, Germany’s 10-year funding cost hit its lowest level since July at an auction, underscoring investors’ nervousness over the euro zone’s prospects.
Elsewhere, the dollar rose to a seven-month high against the yen on news of a larger-than-expected Japanese trade deficit for October and a promise by Japan’s Liberal Democratic Party, considered the front-runner in the upcoming Dec. 16 general election, to fight deflation and the yen’s rise.
Sterling rose to session highs, before settling back, after the minutes of the latest meeting of the Bank of England’s monetary policy committee showed that policymakers considered expanding their bond-buying program at their meeting earlier this month before voting 8-1 to leave the program on hold.
The minutes also gave a strong signal that policymakers have ruled out making further cuts in U.K. interest rates.
Crude oil futures spiked following the reports of an explosion on a bus in central Tel Aviv. A spokesman for Israeli Prime Minister Benjamin Netanyahu called it an act of terrorism.
Latest Price Change From Previous Close ASE Composite (Greece) 816.96 -0.5% FTSE 100 5740.41 -0.1% DAX 7173.69 0.0% CAC-40 3459.22 -0.1% Stoxx Europe 600 269.31 -0.1% Dow Jones Industrials 12788.50 S&P 500 1387.81 Dec. DJIA Future 12754.00 0.0% Dec. S&P 500 Future 1385.10 -0.1% Level In Late New York Trading (Previous Session) EUR/USD 1.2782 1.2817 USD/JPY 82.28 81.67 GBP/USD 1.5906 1.5916 Change From Previous Close Dec. German Bund Future 142.49 +0.11 Dec. U.K. Gilt Future 119.41 -0.01 Jan. Nymex Crude Oil 87.40 +0.65 Jan. Brent Crude Oil 110.79 +0.96 Gold 1725.92 -0.83
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