Europe lower after earnings; Greek crisis worsens
Frankfurt (Apr 16) European equities fell on Thursday after mixed first-quarter earnings reports, as Greece's economic outlook deteriorated further.
The pan-European FTSEurofirst 300 traded around 0.5 percent lower, following earnings from consumer discretionary stocks Diageo and Unilever.
Greece downgrade eyed
Greece was at the forefront of investors' minds on Thursday after the country's economic situation led ratings agency Standard & Poor's to cut its credit rating to "CCC+" from "B-" with a negative outlook.
"Without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable," S&P said.
European Central Bank chief Mario Draghi was questioned about Greece following the central bank's policy decision on Wednesday, when it kept rates unchanged.
Draghi dismissed fears of a Greek default and a bubble in bond markets and said he was not ready to even "contemplate" a default by Greece.
Greek bond yields were under pressure on Thursday, with yields soaring on short and medium term paper. The 2-year bond yield shot up 395 basis points to trade at over 27 percent, and 10-year yields hit 12.8 percent.
Ahead of a meeting with Greek Finance Minister Yanis Varoufakis on Friday, U.S. Treasury Secretary Jacob Lew said he would press his Greek counterpart to "engage proactively" with European officials to resolve a standoff over emergency financing, Dow Jones reported late Wednesday.
German Finance Minister Wolfgang Schaeuble poured cold water on hopes for a deal at a meeting of euro zone finance ministers on April 24, however, saying he doubts a solution would be reached.
Unilever beats, Diageo weighs
Unilever reported better than expected sales for the first quarter, recovering from a slowdown as a result of easing growth in China.
The group saw a rise of underlying sales of 2.8 percent in the quarter, beating analyst expectations of around 2 percent. Shares in the group rallied around 2.7 percent shortly after market open.
Diageo shares tumbled almost 3 percent after it reported slower quarterly trading. The world's largest spirits-maker said net sales fell 0.7 percent in the three months to the end of March.
Alcatel Lucent fell to the bottom of the French CAC after the group, which is being bought by Nokia in a 15.6-billion-euro (£11.2bn) takeover deal, was downgraded by a number of brokers including Citigroup, Goldman Sachs and Credit Suisse.
BAE Systems also tanked around 4 percent after it was cut to "neutral" from "buy".
Oil will also be in focus on Thursday, with Brent crude oil rising more than 3 percent to a 2015 high above $63 per barrel on increasing evidence that U.S. production is peaking, before slumping back to trade around $62 a barrel following an OPEC report.
In business news, the steering committee of Volkswagen's supervisory board will likely meet by Friday to try to resolve a leadership crisis at the German car maker, two sources familiar with the matter told Reuters on Wednesday. Shares in the group slipped around 0.2 percent.
Following the European Commission's decision to file antitrust charges against Google Wednesday, the company's competitors in the U.S. are pushing American antitrust enforcers to investigate allegations that the company unfairly uses its Android system to win online advertising, Reuters reported, citing unnamed sources.
Source: CNBC
