By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks recovered after an
earlier fall Tuesday, but gains were capped by uncertainty about
Greece's future in the eurozone after key debt talks fell
apart.
The Stoxx Europe 600 shifted higher by less than 1 point to
376.84. The index opened lower following a collapse in debt talks
late Monday between eurozone finance ministers and Greece. Greece's
new anti-austerity government rejected an extension to its
240-billion-euro ($272 billion) bailout program under the
conditions offered by its European partners.
Greek bank stocks remained among the biggest decliners on the
Stoxx 600, with Piraeus Bank SA shares losing 5.8%, National Bank
of Greece SA down 4.3%, and Eurobank Ergasias SA shedding 3.7%. The
moves pressured Greece's Athex Composite , which fell 2.6% to
837.39. The Athex's month-to-date gain has now been reduced to
16%.
A new Eurogroup meeting may be scheduled for Friday.
"Whether or not the Greek government will stick to its guns is
difficult to predict, but they seem increasingly cornered," said
Société Générale economist Yvan Mamalet in a note Tuesday.
European Central Bank officials are scheduled to hold a regular
meeting on Wednesday. The agenda is expected to include a
discussion about emergency liquidity assistance, which was recently
increased for Greek banks. Discussing the ELA funding "looks
certain to add pressure, by reiterating the current ELA program
will remain only as long as Greek banks are seen as solvent and
also as long as the Greek government is in talks with the euro
area," said Mamalet.
The euro (EURUSD) had been lower after the breakdown in talks,
but recently recovered to buy $1.1409, versus $1.1356 late
Monday.
European benchmarks: Germany's DAX narrowed its loss to 0.3% at
10,893.27. The closely watched ZEW indicator of German economic
sentiment rose in February to 53.0, the highest reading since
February of last year. But the reading, released Tuesday, fell
short of the 55.5 consensus estimate.
The Center for European Economic Research, or ZEW, said the
ECB's quantitative easing and "unexpectedly high" economic growth
in the fourth quarter have aided sentiment. "On the other hand, the
intensification of the Ukraine crisis and the collision course of
the new Greek government are dampening expectations," said ZEW
President Professor Clemens Fuest in a statement.
France's CAC also came off deeper losses, notching a 0.1% gain
at 4,745.40, while the U.K.'s FTSE 100 turned higher by 0.3% to
6,874.56. On Tuesday, the U.K.'s Office for National Statistics
said consumer-price inflation slowed to 0.3% in January, the lowest
annual rate since March 1960.
Stoxx 600 Movers: TNT Express NV shares dropped to the bottom of
the index, losing 11%, after the Dutch parcel delivery company
swung to a fourth-quarter loss of 137 million euros ($156
million).
Banco BPI SA shares charged up 26% after Spain's Caixabank SA
offered to take over the rest of the Portuguese bank it doesn't
already own for roughly EUR1.09 billion euros ($1.24 billion).
Pandora A/S shot up 17%, driving to the top of the Stoxx 600.
The Danish jeweler said fourth-quarter sales jumped 40% and that it
will raise its annual dividend for 2015 by 38%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires