European Markets Bounced Back From Early Weakness

(RTTNews) - The European markets were down in early trade Tuesday, due to concerns over Greece and the disappointing German investor sentiment report. Greece remains at an impasse with its international creditors and the inability of the two sides to reach a compromise has led to worries about a potential Greek default at the end of the month.

The markets rebounded in late trade, following comments made by German Chancellor Angela Merkel. Merkel stated that she is hoping for a Greek deal by Thursday. A meeting of the European finance ministers will be held in Luxembourg on Thursday.

"I have repeatedly said that I want to do everything possible to keep Greece in the eurozone. I devote myself to this task these days," Merkel stated.

In a statement to the Efimerida Ton Syntakton newspaper, Greek Prime Minister Alexis Tsipras accused his country's creditors of "pillaging" Greece and suggested their motives are political.

"The Greek government is negotiating with a plan and has presented nuanced counterproposals," Tsipras said. "We will patiently wait for the institutions to adhere to realism."

Investors will be watching for developments from the Federal Reserve monetary policy meeting, which will conclude on Wednesday. The Fed is not expected to announce an increase in interest rates due to some recent signs of economic sluggishness, but traders will be paying close attention to any hints regarding the timing of the first rate hike.

A bond-buying programme announced by the European Central Bank in 2012, which helped to calm the financial markets amid the peak of the sovereign debt crisis, was upheld by the top EU court on Tuesday, further strengthening ECB President Mario Draghi's crisis-fighting efforts.

Responding to a challenge from German politicians and academics, the European Court of Justice in Luxembourg said the outright monetary transactions, or OMT, programme is compatible with EU law. On January 14, Advocate General Pedro Cruz Villalon had given a favorable opinion on the bond-buying programme.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.47 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.66 percent.

The DAX of Germany climbed by 0.54 percent and the CAC 40 of France rose by 0.51 percent. The FTSE of the U.K. dipped by 0.01 percent and the SMI of Switzerland finished higher by 0.46 percent.

In Frankfurt, Henkel dropped by 0.14 percent. Henkel's U.S. rival Coty has reportedly won auction to buy certain businesses from Procter & Gamble.

Bayer climbed by 1.98 percent and Merck gained 1.61 percent. Fresenius finished higher by 1.96 percent and Fresenius Medical Care added 0.92 percent.

Deutsche Lufthansa declined by 0.76 percent.

In Paris, Renault advanced by 1.18 percent and Peugeot finished up by 0.22 percent.

Alcatel-Lucent gained 2.76 percent and Orange added 0.85 percent.

In London, Ashtead Group fell by 2.66 percent, after its fourth-quarter report.

British American Tobacco gained 2.92 percent, after Credit Suisse initiated coverage on the stock with an "Outperform" rating. Imperial Tobacco also climbed by 2.24 percent.

GlaxoSmithKline rose by 1.11 percent on takeover speculation.

Ladbrokes increased by 4.36 percent, after Morgan Stanley upgraded its rating on the stock to "Overweight" from "Equal weight."

Mining stocks turned in a weak performance as metal prices declined. Anglo American dropped by 2.23 percent and Randgold Resources fell by 2.68 percent. Antofagasta decreased by 2.13 percent and Rio Tinto surrendered 2.17 percent. Fresnillo also lost 1.84 percent.

Eurozone employment increased slightly in the first quarter, Eurostat reported Tuesday. Employment rose 0.1 percent from the prior quarter, the same rate of growth as seen in the fourth quarter.

Passenger car sales in the European Union grew at a slower pace in May, the European Automobile Manufacturers Association reported Tuesday. New car registrations increased 1.3 percent year-on-year in May, slower than the 6.9 percent growth seen in April.

Germany's investor sentiment weakened for a third straight month in June to its lowest level in seven months as fears of a 'Grexit' intensified. The ZEW Indicator of Economic Sentiment fell more-than-expected to 31.5 from 41.9 in May, survey data from the Mannheim-based Centre for European Economic Research, or ZEW, showed Tuesday.

Economists had expected a reading of 37.3. The latest score was the lowest since November, when the reading was 11.5.

Germany's consumer prices increased for the fourth straight month in May at the fastest pace in seven months, as initially estimated, final data from the statistical office Destatis showed Tuesday. Consumer prices rose 0.7 percent from last year, following a 0.5 percent increase in April. The annual increase matched the preliminary estimate published on June 1.

The decline in U.K. consumer prices proved to be short-lived as they increased in May, while factory gate prices continued its downward trend, official data revealed Tuesday.

Consumer prices rose 0.1 percent from last year as expected by economists, offsetting April's 0.1 percent fall, which was the first drop since 1960, the Office for National Statistics reported. This was the first rise in four months.

Another report from ONS showed that factory gate prices decreased for the eleventh consecutive month in May mainly driven by petroleum and crude oil prices. Output prices dropped 1.6 percent from a year ago, in line with forecast, and slower than a 1.7 percent decrease in April. As expected, output prices edged up 0.1 percent for the third straight month on a monthly basis in May.

After reporting a sharp jump in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Tuesday showing that housing starts pulled back by more than expected in the month of May.

The report said housing starts tumbled 11.1 percent to an annual rate of 1.036 million in May after surging up 22.1 percent to a revised 1.165 million in April. Economists had expected starts to drop to an annual rate of 1.090 million from the 1.135 million originally reported for the previous month.

Meanwhile, the report also said building permits, an indicator of future housing demand, jumped 11.8 percent to an annual rate of 1.275 million in May from the revised April rate of 1.140 million. The increase in building permits came as a surprise to economists, who had expected permits to drop to a rate of 1.105 million.