European Markets Dropped On Greek Concerns & Continued Bond Sell-Off

(RTTNews) - The European markets ended Thursday's session to the downside, but finished off their session lows. Investors continue to fret over the situation in Greece, after the country failed to come to an agreement with its international creditors. The recent sell-off in European bonds also continued Thursday, driving yields even higher.

Greece and its creditors failed to reach an agreement after crucial talks in Brussels late Wednesday, though both Athens and the European Union claimed to have made progress towards a solution and apparently hope to wrap up the deal by the middle of the month.

Greek Prime Minister Alexis Tsipras held talks with European Commission President Jean-Claude Juncker and Eurogroup Chairman Jeroen Dijsselbloem in Brussels in a bid to strike a deal that would pave the way for unlocking funds of about 7.2 billion euros from the existing bailout package.

"It was a good, constructive meeting. Progress was made in understanding each other's positions on the basis of various proposals," the European Commission said.

"It was agreed that they will meet again. Intense work will continue."

Media reports citing Greek officials said that both parties are trying to finalize a deal by June 14.

Greek officials have reportedly said that the country can pay the 300 million euros due on June 5th, but it faces more repayments to the IMF this month, totaling 1.6 billion euros. They had also hinted that the government may opt not to make Friday's payment if there is no sign of a deal by then.

The Bank of England left its record low key interest rate and the size of the quantitative easing unchanged, amid mixed signals about the economic momentum.

The Monetary Policy Committee, led by Governor Mark Carney, decided to retain the key bank rate at 0.50 percent and the size of asset purchases at GBP 375 billion at the end of the two-day rate setting meeting on Thursday.

The rate has been at a historic low since March 2009. The previous change in quantitative easing was an increase of GBP 50 billion in July 2012.

The Bank of France sees strong economic growth this year as it gain strength from a favorable international environment and the weaker euro. In the macroeconomic projections released Thursday, the central bank said France will expand on an average 1.2 percent this year, 1.8 percent in 2016 and 1.9 percent in 2017.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased by 0.65 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.81 percent.

The DAX of Germany dropped by 0.54 percent and the CAC 40 of France fell by 0.83 percent. The FTSE of the U.K. declined by 1.26 percent and the SMI of Switzerland finished lower by 0.21 percent.

In Frankfurt, Deutsche Telecom climbed by 1.35 percent on reports that Dish Network is involved in merger talks with T-Mobile US. Deutsche Telecom is the majority owner of T-Mobile.

RWE sank by 3.03 percent and E.ON weakened by 2.63 percent.

In Paris, Technip dropped by 3.55 percent and Total surrendered 1.89 percent, as oil prices declined.

Renault declined by 2.03 percent and Peugeot lost 1.09 percent.

In London, Johnson Matthey fell by 5.26 percent. The specialty chemicals company reported lower full-year revenues, despite profit growth.

Royal Mail decreased by 4.19 percent. Chancellor George Osborne said Thursday that the U.K. government will sell its remaining 30% stake in the company.

Mining stocks turned in a weak performance, due to falling prices for precious metals. Anglo American dropped by 4.10 percent and Randgold Resources lost 3.39 percent. BHP Billiton fell by 3.18 percent and Fresnillo declined by 3.01 percent.

However, Kingfisher gained 2.66 percent. Merrill Lynch upgraded the stock to "Neutral" from "Underperform."

easyJet finished higher by 0.63 percent, after reporting traffic data for May.

Ericsson climbed by 2.39 percent in Stockholm after JPMorgan raised the stock to "Overweight" from "Neutral."

German construction sector activity slowed in May, reaching the lowest in four month as civil engineering activity declined, survey data from Markit Economics showed Thursday. The seasonally adjusted purchasing managers' index, or PMI, for the construction sector, declined to 50.8 in May from 51.0 in the previous month.

French unemployment rate decreased unexpectedly in the first quarter, though slightly, data from the statistical office Insee showed Thursday. The jobless rate, measured according to International Labour Organisation, or ILO, standards, edged down to 10.3 percent in the three months ended March from 10.4 percent in the fourth quarter. Economists had expected the rate to remain stable at 10.4 percent.

U.K. house prices dropped for the first time in three months in May, data from Lloyds Banking Group's Halifax division showed Thursday. House prices edged down unexpectedly by 0.1 percent month-on-month in May, reversing April's 1.6 percent increase. This was the first fall since February. Prices were forecast to grow 0.2 percent from April.

First-time claims for U.S. unemployment benefits saw a modest decrease in the week ended May 30th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims edged down to 276,000, a decrease of 8,000 from the previous week's revised level of 284,000.

Economists had expected jobless claims to slip to 278,000 from the 282,000 originally reported for the previous week.

Reflecting a much bigger than previously estimated drop in output, the Labor Department released a report on Thursday showing that U.S. labor productivity fell by even more than expected in the first quarter of 2015.

The report said productivity tumbled by a revised 3.1 percent in the first quarter compared to the previously reported 1.9 percent decrease.

Economists had expected a revised decrease of about 2.9 percent, which would still reflect a notable acceleration from the 2.1 percent drop seen in the fourth quarter.

Meanwhile, the report also said unit labor costs jumped by an upwardly revised 6.7 percent in the first quarter versus the previously reported 5.0 percent increase. Costs had been expected to surge up by a revised 6.0 percent.