Europe: Shares dip but no sign of alarm before Greece summit

[LONDON] European shares extended their losses on Tuesday as Greece launched a desperate bid to win fresh aid from sceptical creditors at an emergency euro zone summit, billed as the last chance for Athens to cut a rescue deal.

German Chancellor Angela Merkel said there were only days left to secure a deal, while Greek officials denied suggestions that Athens had not put forward new proposals for the emergency summit, held two days after Greek voters rejected conditions for a new bailout in a referendum.

The pan-European FTSEurofirst 300 closed down 1.6 per cent and the euro zone Euro STOXX 50 fell 2.1 per cent, adding to Monday's 2.2 per cent drop. "I think what we're seeing is investors registering their disappointment with the Greeks and just abandoning equities as quickly as possible and heading towards the usual safe havens,"said IG market analyst Chris Beauchamp.

France and Germany told Greece on Monday to come up with serious proposals to restart financial aid talks, while the ECB kept a tight grip on funding to Greek banks.

Strategists at BNP Paribas said Sunday's referendum results did not mean Greece had to quit the euro zone, but did increase the chances it will leave to 70 percent. "In light of the referendum, the likelihood of the Greek government acceding to creditors' demands has diminished," they said in a note.

Among gainers, Evonik rose 2.4 per cent after UBS lifted its target price for the stock while Svenska Handelsbanken gained 2.5 per cent after a similar upgrade from Deutsche Bank.

On the downside, Technip sank 8.3 per cent to its lowest level since January after the oil industry engineering and construction group announced a restructuring programme, booking a 650 million-euro (US$719 million) charge and cutting 6,000 jobs.

Rolls-Royce dropped 5.4 per cent, following a 6.3 per cent loss on Monday, as brokers downgraded the stock after a third profit warning in nine months.

REUTERS