European stocks steadied Tuesday, with investors awaiting the
outcome of an impromptu summit of eurozone leaders at which Greece
will once again face its European creditors.
In early trade, the Stoxx Europe 600 was 0.3% higher. Germany's
DAX rose 0.4%, France's CAC-40 was 0.1% higher and in southern
Europe, Italy's FTSE MIB rose 0.7% and Spain's IBEX added 0.2%.
Moves in debt markets were muted too.
The yield on Germany's 10-year benchmark bond was at 0.75%,
around 0.02 percentage point lower on the day. Yields fall as bond
prices rise and a strong bid for assets considered safest during
times of stress has supported German debt in recent days.
The yield on Italian 10-year debt was at 2.5%, steady on the
day. The yield on 10-year Spanish debt was at 2.35%, also broadly
unchanged.
On Monday, the European Central Bank raised the pressure on
Greek banks by forcing them to post more collateral for emergency
central bank loans they depend on for survival, while also
maintaining a ceiling on the amount of the loans that have been in
place for more than a week.
"This effectively makes it harder for Greece's banks to access
emergency loans," Credit Suisse economists wrote in a note.
That decision came after Greeks on Sunday voted overwhelmingly
to reject demands for economic overhauls and fiscal cuts made late
last month by the country's international lenders.
Without a fresh inflow of funds, Athens will have trouble paying
its bills and may default on a critical €3.5 billion ($3.9 billion)
payment owed to the ECB on July 20 to redeem Greek government bonds
held by the central bank.
"We are currently in a classic stalemate," Jim Reid, senior
strategist at Deutsche Bank, wrote in a note. Citigroup economists,
however, also noted "the scope for significant market contagion
should continue to be limited."
The head of Greece's banking association said banks would remain
closed through Wednesday; few expect them to open soon after
that.
They were closed all of last week, as was the country's main
stock exchange.
The euro was 0.3% lower against the dollar in early trade
Tuesday, at around $1.1024.
In commodity markets Brent crude was 0.9% higher at $57.04 per
barrel. On Monday, oil prices recorded their biggest single-day
declines in more than three months, as gyrations in Chinese stocks
and the prospect of more crude from the U.S. and Iran revived
worries about the global supply glut.
Gold was 0.5% lower on the day at $1,168 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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