World shares saw a
muted end to what looks set to be their best week since April on Friday
as Greek debt talks took yet another confusing turn and put European
markets on the back foot.
The
International Monetary Fund dramatically raised the stakes in Greece's
stalled debt talks late on Thursday, announcing its delegation had left
negotiations in Brussels and flown home because of "major differences"
with Athens.
European and Greek politicians tried to overcome the setback, saying on Friday that talks would continue in a bid to reach a deal by June 18, but for traders it was still a dent to growing optimism for an agreement.
There was little sign of panic however. MSCI's all-world country index .MIWD00000PUS was up 0.85 percent for what looked likely to be its best week since late April.
The pan-European FTSEurofirst 300 .FTEU3 index fell a modest 0.25 percent and though the euro EUR= tumbled for a second day to $1.1233, it was still up 1 percent for the week.
"We are getting close and close to D-day and this take-it-or leave-it scenario," said Derek Halpenny, European head global market research at Bank of Tokyo Mitsubishi.
"But nobody in my view is ready to trade the 'Grexit' view yet. The expectation is still that a deal will be reached."
In the bond market there was also mild caution. Benchmark 10-year Italian, Spanish, Portuguese and Greek bonds saw yields nudge up between 7 and 9 basis points as investors moved into the traditional safety of German Bunds. DE10YT=TWEB [GVD/EUR]
"It's a reaction to the IMF withdrawal ... a classic risk-off pattern," said Christian Lenk, a strategist at DZ Bank.
As well as the surprise IMF move, the European Union told Greek Prime Minister Alexis Tsipras to stop gambling with his cash-strapped country's future and take the crucial decisions needed to avert a devastating default.
Traders were also eyeing euro zone industrial production data due at 0500 ET for the latest reading of how the bloc's economy is faring amid the uncertainty. ECONG7
European and Greek politicians tried to overcome the setback, saying on Friday that talks would continue in a bid to reach a deal by June 18, but for traders it was still a dent to growing optimism for an agreement.
There was little sign of panic however. MSCI's all-world country index .MIWD00000PUS was up 0.85 percent for what looked likely to be its best week since late April.
The pan-European FTSEurofirst 300 .FTEU3 index fell a modest 0.25 percent and though the euro EUR= tumbled for a second day to $1.1233, it was still up 1 percent for the week.
"We are getting close and close to D-day and this take-it-or leave-it scenario," said Derek Halpenny, European head global market research at Bank of Tokyo Mitsubishi.
"But nobody in my view is ready to trade the 'Grexit' view yet. The expectation is still that a deal will be reached."
In the bond market there was also mild caution. Benchmark 10-year Italian, Spanish, Portuguese and Greek bonds saw yields nudge up between 7 and 9 basis points as investors moved into the traditional safety of German Bunds. DE10YT=TWEB [GVD/EUR]
"It's a reaction to the IMF withdrawal ... a classic risk-off pattern," said Christian Lenk, a strategist at DZ Bank.
As well as the surprise IMF move, the European Union told Greek Prime Minister Alexis Tsipras to stop gambling with his cash-strapped country's future and take the crucial decisions needed to avert a devastating default.
Traders were also eyeing euro zone industrial production data due at 0500 ET for the latest reading of how the bloc's economy is faring amid the uncertainty. ECONG7
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