Europe: Stocks little changed amid Fed optimism, Greek Debt Talks

[LONDON] European stocks were little changed amid optimism the Federal Reserve will raise rates gradually, while investors weighed Greek debt talks.

The Stoxx Europe 600 Index added 0.1 per cent to 384.22 at the close of trading. The benchmark gauge trimmed a decline of as much as 1.5 per cent after US jobless claims and leading economic indicators beat estimates, while consumer prices rose at a slower pace than forecast.

"A relatively modest inflation number suggests that the imperative for the Fed to act isn't that strong," said Peter Dixon, an economist at Commerzbank AG in London.

"It reinforces the message that any rate hikes will be gradual. Greece is a risk that's still bubbling away. We've been down this road before - markets will want to tread carefully until we get to the real endgame."

Investors are also seeking signs of progress in Greek negotiations, with the International Monetary Fund saying it won't grant a grace period if the country fails to make a payment due on June 30. Euro-area finance chiefs met in Luxembourg on Thursday in what has been billed as a last chance for Greece to agree upon terms for as much as 7.2 billion euros in aid.

The uncertainty is souring a winning streak for the Stoxx 600, which is heading for its worst quarter in three years after rallying the most since 2009 in the first three months of the year.

Stocks pared some declines today after Kathimerini reported the European Commission and the European Central Bank are working on a draft of a possible statement on debt relief to be used if Greece reaches an agreement with creditors. The ASE Index rose 0.4 per cent, reversing a drop of as much as 4.3 per cent.

ABB Ltd dropped 3.2 per cent after UBS recommended selling the shares, saying estimates on the performance of some businesses are too high. Bilfinger SE tumbled 14 per cent after saying a review revealed substantial losses at its power business. The company said it will sell the unit within a year.

Telecom Italia SpA gained 4.1 per cent. Vivendi SA, its biggest investor, is in favor of the Italian carrier exploring a sale of its Brazilian business, according to people familiar with the matter.

BLOOMBERG