ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)


European stocks moved sharply lower on Tuesday, as nagging concerns that Greece won’t be able to strike a genuine pact with its eurozone lenders before a large debt payment is due next week intensified.

Greece’s latest debt-negotiation drama, led by its antiausterity government, has placed the Hellenic Republic squarely back in the spotlight, helping drive stocks lower.

Greece’s Athex Composite Index slid 3.9% to 794.23, posting its largest percentage slide since March 18.

The pan-European Stoxx Europe 600 index fell 1.5% to 391.01, with only the oil-and-gas sector moving higher as oil futures (CLM5) rose back above $60 a barrel (

Greek jitters: Athens is facing a 750-million-euro ($832 million) debt repayment to the International Monetary Fund next week, but there are fears it will run out of cash unless it reaches a deal with creditors to unlock the next tranche of bailout money.

Austrian Finance Minister Hans Joerg Schelling told Reuters on Tuesday that progress is being made (, but that it remains unclear whether a deal will be struck in time for the eurozone finance ministers’ meeting on Monday. Meanwhile, head of the Eurogroup Working Group Thomas Wieser told CNBC Greece and its creditors won’t come to a comprehensive agreement by next week ( as was previously expected.

The negotiations have been going on since Greece and its lenders agreed on a bailout extension in February, and the two sides are struggling to agree on which reform measures the country must undertake to receive the next portion of aid.

One of the creditors, the IMF, fears Greece’s debt burden is becoming unsustainable again, and it has warned it may withhold bailout money ( unless the eurozone agrees to debt relief, the Financial Times reported Monday. Eurozone officials have categorically ruled out a write-down on Greece’s debt.

Christian Schulz, senior economist at Berenberg, said in a note that debt relief could carry “moral hazard” as it would “reward Greece for reckless economic behavior at the expense of its eurozone partners.”

“Without structural reforms, and particularly without reversing previous structural reforms, Athens will not be able to pay back its debt,” he said.

The yield on 10-year Greek government bonds climbed 51 basis points to 10.94%.

Other markets: Elsewhere, Germany’s DAX 30 index fell 2.5% to 11,327.68, while France’s CAC 40 index ended 2.1% lower at 4,974.07, the first close below 5,000 since March 12.

A strike by train drivers in Germany ( has brought most of the country’s long-distance rail traffic to a halt, threatening a blow to its export-driven economy.

EU forecasts:In its spring economic forecasts (, the European Commission struck an upbeat tone on most of the eurozone, but sharply downgraded the outlook for Greece. For 2015, the EU’s executive arm now expects the Greek economy to grow by 0.5%, compared with a previous forecast of 2.5%.

For the eurozone, the commission now sees 1.5% economic growth in 2015, up from the 1.3% forecast previously.

Movers: Shares of UBS AG climbed 3.8% after the Swiss bank reported first-quarter profit that beat analyst expectations (