December 6, 2023

U.S. Markets Calm as Greece Weighs on Europe

Markets were lower in Europe, pressured by financials, as investors sold riskier assets after talks on a revised bailout package for Greece highlighted the fragile debt situation in peripheral euro zone countries.

In the United States, the major averages rose slightly in the first half-hour of trading. The Dow Jones industrials were up 23.31, or 0.2 percent, to 12,662.05. The Standard Poor’s 500-stock index showed a similar gain, and the Nasdaq composite was marginally higher.

Commodities bounced some way back on Monday from their biggest weekly drop since 2008, revived by a weaker dollar and strong United States jobs data, which helped restore some confidence to a shaken investment community.

Brent crude oil broke above $111 a barrel and United States silver leapt by more than 5 percent after data from Washington on Friday showed private employers added jobs at the fastest pace in five years in April.

The dollar slipped against a basket of currencies as as heartened investors turned to higher-yielding, riskier assets, to the benefit of commodities.

In Europe, the FTSEurofirst 300 index of top European shares was down 0.8 percent after rising 1.2 percent on Friday. The index has fallen in four out of five sessions and is up just 1.4 percent this year.

Financials were among the top decliners, with the STOXX Europe 600 banking index falling 1.5 percent and Bank of Ireland down 3.7 percent. The National Bank of Greece fell as much as 5.7 percent after Standard Poor’s cut the rating on Greece’s sovereign debt to B from BB- and said that may hurt the creditworthiness of the country’s four biggest banks.

After an unannounced meeting of top euro zone finance officials in Luxembourg on Friday night, Jean-Claude Juncker, chairman of the euro zone’s finance ministers, said there was consensus that Greece needed a new plan.

A 110 billion euro, or $157 billion, rescue of Greece was negotiated last May.

“This has potential to disrupt the market in the near term as it looks increasingly likely that we will see another adjustment package for Greece,” said Klaus Wiener, chief economist at Generali Investments.

“The credit crisis is unlikely to be over for quite a while,” Mr. Wiener said. “We need to see first that those countries which are not so much under market pressure right now stick to their consolidation path, otherwise they will not be able to regain the necessary market trust. And rebuilding trust takes time.”

The Euro STOXX 50, the euro zone’s blue chip index, fell 1.9 percent.

Among individual movers, Barclays and HSBC fell 1.2 percent and 1.5 percent respectively after Barclays said it would make a £1 billion, or $1.6 billion, provision in the second quarter of 2011 to cover the costs related to sales of payment protection insurance, with HSBC setting aside $440 million.

MAN was up 3.2 percent after Volkswagen said it was making an offer for the company. The truck maker Scania jumped 6.9 percent because the company is in talks with MAN over a potential tie-up.

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