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Greek Drop Leads Europe Stocks Down Amid Growing Default Concern

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A slide in Greek shares led European stocks to their lowest level in two months on concern that debt negotiations will fail to secure funding in time to prevent the nation defaulting.

The Stoxx Europe 600 Index fell 1.5 percent to 391.01 at the close of trading, after earlier rising as much as 1.1 percent on better-than-estimated company results. Shares extended losses after a Greek official said a funding deal won’t be possible until international creditors agree on a common set of demands. Greece’s ASE Index slid 3.9 percent, the most in seven weeks.

“We still have Greece in the background,” said Peter Dixon, an economist at Commerzbank AG in London. “Some of the earnings are supportive, but these tend to be short-term effects which can fade out quite quickly. It may well be a market with high volatility going forward, which may not necessarily be a bad thing; we can’t expect the current trend to continue unabated. It’s going to be a lot more noisy.”

German Finance Minister Wolfgang Schaeuble said Greece may not be able complete the work needed for an agreement on financial aid in time for funds to be disbursed by the May 12 deadline for repayment of about 1 billion euros ($1.1 billion) to the International Monetary Fund.

The Stoxx 600 has still risen 14 percent this year amid a weaker euro and unprecedented monetary stimulus, prompting the European Commission to raise its euro-area growth forecast.

The U.K.’s FTSE 100 Index reversed an earlier advance of as much as 1 percent, falling 0.8 percent, as the market reopened after a holiday. The Swiss Market Index gave up gains of as much as 1.2 percent, also dropping 0.8 percent. Germany’s DAX Index slid 2.5 percent to its lowest level in two months.

UBS, HSBC

Among stocks moving on corporate news, HSBC Holdings Plc fell 3.2 percent after first-quarter revenue missed analysts’ estimates and costs increased at a faster pace. UBS Group AG jumped 3.8 percent to its highest price since 2008 after reporting that quarterly net income almost doubled.

Boliden AB slipped 4.3 percent after the zinc and copper miner posted first-quarter operating profit slightly below analyst estimates.

Energy stocks posted the best performance of the 19 industry groups on the Stoxx 600 as oil rose to $60 a barrel in New York for the first time since December on signs the U.S. supply glut is easing. BP Plc contributed the most to gains, rising 1.4 percent.

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