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Europe: Stocks jittery as Greek debt drama drags on

[LONDON] Europe's main stock markets diverged Wednesday as investors reacted to mixed corporate news and awaited the next moves concerning Greece.

London's benchmark FTSE 100 index ended the day down 0.49 per cent to 7,028.24 points, while the CAC 40 in Paris finished 0.36 per cent higher at 5,211.09 points.

Frankfurt's DAX 30 index fell 0.60 per cent to 11,867.37 points despite the German government raising its 2015 growth forecast to 1.8 per cent.

Milan added 0.32 per cent while Madrid shed 0.20 per cent.

The euro slid to US$1.0728 compared with US$1.0735 late in New York on Tuesday.

"Investor sentiment was dampened by the overhanging concerns regarding Greece's debt crisis as officials on both sides struggle to make meaningful progress," said analyst Kash Kamal at Sucden Financial Research.

Markets were looking ahead to the end of the week when eurozone finance ministers are due to meet in Latvia's capital Riga.

Eurogroup president Jeroen Dijsselbloem offered a glimmer of hope on the negotiations with Athens on Tuesday, saying some progress had been made, with the EU pressing Athens to detail a programme of acceptable reforms by Friday.

With Greek government coffers rapidly emptying, analysts warn Athens may have only weeks left before defaulting and possibly exiting the euro unless it reaches a deal with the EU and IMF to unlock 7.2 billion euros in remaining bailout loans.

But Greek Finance Minister Yanis Varoufakis downplayed the chances of a breakthrough in Riga, though he expressed confidence in eventually reaching a deal.

"This Eurogroup is informal and will last around two or two-and-a-half hours, and no Eurogroup decides on something so important in such a short meeting," he told Greek media late on Tuesday.

However he said he hopes the meeting "will be an important step in advancing the negotiations," and that "very soon we'll be able to talk about reforms that will be the backbone of a new growth programme." The Athens stock exchange traded as much as 3 per cent lower, before picking up after the ECB stepped up its support for Greek banks to close with a 2.1 per cent gain.

Shares in Britain's biggest retailer Tesco slumped 5.15 per cent to 1,048 pence after the supermarket group announced it had plunged into a record loss last year as it took a huge writedown on the value of its property.

Tesco, which was hit by a major crisis last October after accounting errors that overstated profits, reported a loss after tax of £5.74 billion (US$8.58 billion, 8.0 billion euros) in the 12 months to the end of February.

"The extent of the impairments are eye-watering," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

"In addition, the outlook for the business remains unclear as management seek to spin several plates at once, with focus on such matters as the general restructuring, cost savings and an effort to regain some competitive composure." Rolls-Royce shares meanwhile climbed 4.07 per cent to 1,048 pence after the British maker of aircraft engines unveiled a new chief executive days after announcing a record deal.

John Rishton will retire from the top post on July 2 to be replaced by Warren East, a non-executive director at the company and former chief executive of British semiconductor manufacturer ARM Holdings.

Rolls last week said it had won a contract from Dubai's Emirates Airline worth a record US$9.2-billion to supply and maintain Trent 900 engines for 50 Airbus A380 superjumbos.

AFP