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GLOBAL MARKETS: Europe Stocks Choppy; Greek Hopes, Woes For Portugal

Friday, Jan 27, 2012

-- Stocks choppy, within tight range

-- EU's Rehn boosts hopes for Greece, but Portugal is a worry for investors

-- All eyes on U.S. GDP following FOMC statement on economy, monetary policy

   By Andrea Tryphonides and Ishaq Siddiqi 
   Of DOW JONES NEWSWIRES 
 

LONDON (Dow Jones)--European stock markets ticked between small losses and gains Friday after European Union Commissioner Olli Rehn said Greece was close to a deal with its private creditors on the restructure of its debt, but investors were hesitant after the cost of insuring Portugal's debt against default climbed to a fresh record Friday.

"There are more market concerns that Portugal could be the next Greece and the original EUR78 billion loan package may not be enough given the economic and fiscal slippage. At a very high level we do see certain parallels between the two," said Deutsche Bank in a note. Earlier, Portugal's five-year credit default swap was 53 points wider at 1430 basis points--a record wide, according to data-provider Markit.

Investors were also keen to take some money off the table after a week of gains. The benchmark Stoxx Europe 600 index is currently up 0.7% in the week to date. In addition to this, investors may be holding back ahead of the EU summit, which commences Monday.

At 1150 GMT, the Stoxx 600 index was down 0.1% at 257.70, though was off the low of 256.58 after Rehn said he hoped a Greek debt deal would be sealed by the weekend. London's FTSE 100 was down 0.3% at 5779.78, weighed down by oil majors, which are heavily weighted on the U.K.'s blue-chip index. BP was down 1.8% after a Louisiana court ruled late Thursday that BP has to indemnify Transocean against damage claims from individuals and businesses affected by the Gulf of Mexico oil disaster.

Elsewhere, Paris's CAC-40 was 0.2% lower at 3357.88 and Frankfurt's DAX was up 0.3% at 6556.88.

U.S. stock futures were slightly higher and the main U.S. indexes are expected to start with mild gains Friday. The focus for investors will be the release of fourth-quarter gross domestic product data at 1330 GMT, particularly after the Federal Reserve's dovish comments on Wednesday and its decision, for now, to keep its key rate low into 2014. Commenting on the upcoming GDP data, Rabobank said, "The market will be hoping for signs that trade and consumption made positive contributions to growth in the final months of last year to complement the improvement in economy data into the closing stage of 2011." At 1155 GMT, the Dow Jones Industrial Average front month futures contract was up 0.1% at 12,700.0 and the S&P 500 futures contract was 0.1% higher at 1316.20.

In foreign exchange markets, the euro increased against the dollar following comments on Greece by Rehn. It hit a session high of $1.3145 and at 1155 GMT was at $1.3135 against the dollar, from $1.3109 late Thursday in New York. The dollar was at Y77.00, from Y77.46.

Elsewhere, spot gold was at $1,722.80 a troy ounce, up $0.90 from its New York settlement on Thursday. March Nymex crude oil futures were up 28 cents at $99.98 a barrel, while Brent oil futures were up 35 cents at $111.14. The March bund contract was up 0.22 at 138.91. Earlier a successful six- and 12-month Italian T-bill sale helped the positive tone in Europe. These results will boost sentiment ahead of the Italian Treasury's sale of as much as EUR8 billion in longer-dated government bonds Monday.

-By Andrea Tryphonides and Ishaq Siddiqi, Dow Jones Newswires; +44-20-7842-9281; andrea.tryphonides@dowjones.com

(END) Dow Jones Newswires

January 27, 2012 07:14 ET (12:14 GMT)