By Sara Sjolin and Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks fell Tuesday, as
speculation about a rate hike in the U.S. and concerns over
Greece's reform program outweighed optimism over the European
Central Bank's bond buys.
The benchmark Stoxx Europe 600 index slumped 0.9% to end at
389.66. But outperforming the index, banking giant Credit Suisse
Group AG (CS) jumped 7.8% after news that Prudential CEO Tidjane
Thaim
(http://www.marketwatch.com/story/prudential-confirms-ceo-to-leave-as-profit-rises-2015-03-10-34851644)
will take over the helm at the Swiss bank.
U.S. rate blues: European stock markets were hampered by a
selling spree in U.S. stocks
(http://www.marketwatch.com/storyno-meta-for-guid), spurred by
nervousness about what's seen as a virtually inevitable U.S. rate
hike this year. A solid February jobs report released
(http://www.marketwatch.com/story/economy-gains-295000-jobs-in-february-2015-03-06)
last week has increased speculation the Federal Reserve's statement
next week might hint at a rate increase in coming months.
The European energy group suffered the biggest loss among major
sectors, with dollar-denominated oil prices
(http://www.marketwatch.com/story/oil-prices-hanging-on-fresh-supply-data-2015-03-10)
hit by the surge in the U.S. dollar
(http://www.marketwatch.com/story/dollar-hits-fresh-multiyear-highs-against-euro-yen-2015-03-10)(DXY)
against its rivals. The dollar has jumped due to the divergence
between the Fed's widely anticipated shift into tightening mode and
the continuing pursuit of stimulus by the European Central Bank and
the Bank of Japan, among other central banks.
In the group, Galp Energia fell 7.8%, BG Group PLC lost 7.4% and
Subsea 7 SA moved down 5.6%.
Greece jitters: With little data to distract on Tuesday,
continued concerns about Greece's financial situation weighed on
markets.
The Eurogroup of eurozone finance ministers urged Greece on
Monday to stop wasting time and get moving on identifying economic
reforms that satisfy its international lenders -- a prerequisite to
unlock the next tranche of financial aid to Greece. The country is
at risk of running out of cash later this month, unless it receives
more money.
Technical talks on the economic measures will begin on
Wednesday.
The uncertainty over Greece's financial future has over the past
few months fanned fears the country will eventually leave the
eurozone, although most economists consider it to be a relatively
small risk. If, however, it were to happen, Standard & Poor's
Ratings Services said in a note on Tuesday it would likely not have
a significant impact on foreign banks, which was a major concern
during the height of the eurozone crisis.
"We consider the direct impact on foreign banks from a Grexit or
from continuing uncertainty about it as limited because they have
relatively limited direct exposure to Greek banks or to Greece's
public and private sector, having significantly reduced their
lending since the restructuring of Greek government debt in 2012,"
said Standard & Poor's credit analyst Osman Sattar in the
report.
ECB's cash injection: While grappling with Greece, investors
also monitored the effect of the ECB's 60-billion-euro ($64.5
billion) a-month quantitative easing program that was kicked off
Monday. Bond yields across most of the eurozone dropped close to
record lows on the launch date and continued to decline on Tuesday.
The yield on 10-year German government bunds during the session
fell to 0.263%, a record low, according to electronic trading
platform Tradeweb.
Euro slide: The shared currency fell to its lowest level since
April 2003, hit by the Greek jitters and weakened by the ECB's QE
program.
Other indexes: Germany's DAX 30 index dropped 0.7% to 11,500.38,
falling back from a record closing high reached on Monday.
France's CAC 40 index lost 1.1% to 4,881.95. The U.K.'s FTSE 100
index tumbled 2.5%
(http://www.marketwatch.com/storyno-meta-for-guid)to 6,702.84.
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