By Carla Mozee, MarketWatch
European stocks reversed course, moving higher Monday, following
reports that Greece has made changes to a key team negotiating with
its international creditors.
Meanwhile, a boardroom shake-up has pushed shares of car maker
Volkswagen AG higher, but Deutsche Bank AG shares were lower as the
banking heavyweight reported that legal costs undercut its
earnings.
The Stoxx Europe 600 rose 0.4% to 410.19, with all sectors
climbing out of the red to trade higher.
In Frankfurt, the DAX 30 reversed course and rose 1% to
11,925.03. Volkswagen AG shares topped the DAX, rising 3.7% after
the car maker's chairman, Ferdinand Piech, unexpectedly resigned
(http://www.marketwatch.com/story/volkswagen-chairman-piech-resigns-2015-04-26)
over the weekend following a failed move to oust Chief Executive
Martin Winterkorn.
But Deutsche Bank (DB) shares were putting in the worst
performance as they fell 4.2%, the worst session since January
2014, according to FactSet data. The largest bank in Germany said
first-quarter net profit dropped about 50%
(http://www.marketwatch.com/story/deutsche-bank-profit-halves-on-litigation-costs-2015-04-27)
to 559 million euros ($607.8 million), cut down by penalties the
company agreed to pay to settle allegations over manipulating the
London interbank offered rate, or Libor.
In Paris, the CAC 40 switched higher, rising 0.5% to 5,228.49,
and the U.K.'s FTSE 100 tacked on 0.3% to 7,093.33
(http://www.marketwatch.com/story/ftse-100-moves-lower-but-hsbc-outperforms-2015-04-27).
Shares of HSBC Holdings PLC rose 3.1%, the best on the Stoxx 600,
following a Sunday Times report the lender is weighing a deal
valued at 20 billion pounds ($30.4 billion) to spin off its British
retail bank.
Greece: Greece's Prime Minister Alexis Tsipras has made changes
to the Greek team
(http://www.reuters.com/article/2015/04/27/us-eurozone-greece-varoufakis-idUSKBN0NI0VI20150427)
that is negotiating with its international creditors, according to
media reports Monday afternoon. The move could reduce the influence
that Greek Finance Minister Yanis Varoufakis has on the talks,
which have been criticized moving too slowly. Euclid Tsakalotos,
Greece's alternate foreign minister, will head a new policy
negotiating team, The Wall Street Journal reported
(http://www.wsj.com/articles/greece-shuffles-team-negotiating-with-creditors-1430135685?KEYWORDS=greece).
Greece's Athex Composite turned up by 1% to 769.06. Meanwhile,
the yield on 2-year debt slipped 10 basis points to 25.19%, as
prices rose.
European stocks in recent weeks have seen bouts of selling in
part on fears that Greece appears unlikely to reach a deal with
creditors and that it will leave the eurozone.
"The situation in Greece is continuing to drag on and people are
losing patience," said Jameel Ahmad, chief market analyst at FXTM,
adding that he believes Greece will be able to stay in the
eurozone.
"There is an argument that in the longer-term, the European
economy might be better without its weakest member. However, I
don't believe the euro would not be vulnerable to sudden losses if
Greece leaves [the eurozone]," Ahmad said. "Greece has the
potential to be the factor that sends the euro to parity," against
the greenback, he said.
The euro (EURUSD) has managed to push back above $1.08 against
the U.S. dollar, largely because of dollar-softness after
weaker-than-expected U.S. economic data.
For equities, the longer-term prospects "are looking very
bullish," Ahmad said. The ECB's asset-buying program is set to run
through September 2016, and "if it continues to have the desired
impact on economic data, then European stocks have the room to
continue moving higher."
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