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European stocks are trading mixed this morning with peripheral equities rebounding stronger, while carmakers fell after Chinese auto sales slumped.
The Stoxx Europe 50 Index increased 0.38% as of this writing, after swinging between gains and losses of as much as 0.4 percent. Benchmark indexes of Italy and Portugal rose at least 0.7 percent, after entering corrections on Monday.
The Stoxx 600 fell for a fourth day yesterday pushing it 10 percent down from an April record.
European leaders at a Brussels summit yesterday ordered Greece to accept a rescue package by Sunday or face expulsion from the euro. The Sunday deadline looms as the culmination of a five-year battle to contain Greece’s debts. The country’s stock market will remain closed today and should be opening tomorrow.
The market is expected to continue trading on headlines, with significant attention towards Greece, and is expected to remain trading range bound for the time being.
Carmakers fell the most among Stoxx 600 groups. Volkswagen AG and BMW AG lost at least 1.3 percent after China’s passenger- vehicle sales fell for the first time in more than two years.
Shares in the world’s second-largest economy tumbled to a three- month low on concern that measures to stabilize equities are failing to halt a bear-market rout.
Barclays Plc advanced 3.5 percent after saying chief executive officer Antony Jenkins will leave. John McFarlane will be the executive chairman while the company searches for a replacement for Jenkins. Antony Jenkins and pledged to tackle a “cumbersome, bureaucratic” bank through deeper cost cuts.
The U.K.’s FTSE 100 Index rose 0.3 percent. Chancellor of the Exchequer George Osborne delivers the first budget of a Tory-majority government in almost two decades this early afternoon. It is reported that he may press ahead with plans to slash a further 12 billion pounds from welfare costs.
European government bonds swung between gains and losses as investors weighed the likelihood of Greece accepting a bailout deal in time to secure its place in the euro region. German, Spanish and Italian securities fluctuated after rallying on Tuesday. European leaders set a Sunday deadline for Greece to accept a rescue, saying otherwise they’ll take the unprecedented step of propelling the country out of the currency union. Greece has until Friday to present its proposals.
The yield on German 10-year bunds fell less than one basis point to 0.64 percent. The 0.5 percent security due in February 2025 rose to 98.75.The yield climbed to as high as 0.66 percent and fell as low as 0.61 percent earlier in the day. From Friday through Tuesday, it dropped 20 basis points.
Italian 10-year bond yields dropped three basis points to 2.24 percent, having climbed to 2.3 percent earlier. The yield on similar-maturity Spanish bonds fell two basis points to 2.24 percent, after reaching 2.29 percent.
Any optimism a deal can be reached will be tested in the next few days. European Central Bank Executive Board member Christian Noyer said “we are starting to be very worried” about Greece’s fate. Support for the nation will be stopped if there’s no political accord in sight for an aid program, he said. German Chancellor Angela Merkel said she’s “not especially optimistic” a deal can be reached by the deadline.
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