European Stocks Steady

By Josie Cox 

        European stock markets steadied Friday after a seven-session rally largely fueled by expectations that Greece will be able to avert an exit from the eurozone.
        The Stoxx Europe 600 was little changed. As of late Thursday, the pan-European index had enjoyed its longest winning streak since late January, fueled in large part by Greek developments.
        In the U.S., futures contracts showed the S&P 500 opening flat on the day. Futures, however, do not always accurately predict moves after the opening bell.
        Germany's lower house of parliament on Friday voted to allow the government to participate in negotiations on a three-year bailout for Greece. Earlier in the day, the International Monetary Fund said it would participate in a bailout plan if it includes debt restructuring and bold government reforms.
        On Thursday, eurozone finance ministers gave a provisional green light to the negotiations and the European Central Bank raised its emergency lending to Greek banks, which have been shut for almost three weeks along with the country's Athex stock exchange.
        The risks of a Greek exit have "faded to a fraction of their previous size," said Peter Chatwell, a rates strategist at Mizuho in London.
        "It certainly feels like headlines are abating and attention is slowly moving to events elsewhere," Deutsche Bank strategist Craig Nicol wrote in a note to clients.
        Many, however, still see challenges ahead.
        "While the Greek deal significantly reduces the risks of an imminent disorderly exit, the road will likely be bumpy, as the preliminary details of any new program look harsh to implement," Barclays economists wrote in a note to clients.
        Gary Jenkins, chief credit strategist at London-based asset manager LNG Capital, said that the deal, as it stands, is going to be difficult for the Greek government to implement and will do little to improve the economic outlook.
        The euro was marginally higher against the dollar at $1.089 by midafternoon.
        The British pound earlier in the session hit a fresh seven-year high against the euro after Bank of England Governor Mark Carney on Thursday suggested a rate hike may come sooner than markets expect. Higher interest rates generally make a currency more attractive.
        German 10-year government bond yields were trading at 0.76%, around 0.03 of a percentage point lower on the day. Italian and Spanish 10-year yields were both at 1.95%, slightly lower on the day. Yields fall as bond prices rise.
        In commodity markets, Brent crude was 0.4% lower at $56.70 per barrel. Gold was broadly flat at $1,143.
        Write to Josie Cox at josie.cox@wsj.com
        (END) Dow Jones Newswires

        July 17, 2015 08:54 ET (12:54 GMT)

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