LONDON: European stocks swung around Tuesday as Athens and its EU-IMF creditors remained locked in a stand-off over a deal to save Greece from a possible default, dealers said.
Markets also took a knock from news that investor sentiment has tumbled to a seven-year low in eurozone powerhouse Germany, weighed down by uncertainty over Greece and subdued global growth.
Frankfurt's DAX 30 initially fell by over 1 percent on news that Germany's investor confidence index, calculated by the ZEW economic institute, fell 10.4 points to 31.5 points in June -- its lowest level since November last year.
However by afternoon it had recovered ground, standing up 0.05 percent at 10,989.92 points.
The CAC 40 in Paris, which was down by over a point in midday trading, rebounded to a gain of 0.22 percent at 4,826.00 points.
London's FTSE 100 index shed 0.32 percent to 6,688.92 points.
Oanda analyst Craig Erlam said that "the uncertainty surrounding Greece acts as a major drag on sentiment", adding that "the ZEW economic sentiment figures... highlighted this."
In crisis-hit Greece, the ATHEX index fell 4.40 percent to 705.79 points, having slumped almost 5.0 percent on Monday in a global selloff after talks with creditors collapsed over the weekend.
"The Greek government continues to remain stubborn, despite calls by European officials for it to make further reforms before creditors release further bailout funds," said dealer Amir Khan at trading firm Currencies Direct.
"Greece has to pay 1.6 billion euros ($1.8 billion) to the International Monetary Fund by 30 June, so without the bailout funds the risk of a default looms large. If Greece does default, it would have to leave the eurozone."
- Athens compromise -
Greece still has "two or three gestures" it can make to break the deadlock with the country's creditors and avoid a disastrous default, Prime Minister Alexis Tsipras reportedly told an opposition leader as he sought to muster support at home for a compromise deal.
The radical left government in Athens is resisting calls from the international creditors to increase taxes and reform pensions, arguing that such measures have already failed to revive the recession-hit Greek economy.
Greece's EU-IMF bailout expires on June 30, and it had been hoped that a deal could be reached by Thursday when the eurozone's 19 finance ministers, who control the purse strings of the rescue programme, meet in Luxembourg.
Sources in Brussels said European leaders are considering holding an emergency summit on Greece this weekend but any decision will depend on the outcome of the Luxembourg meeting.
In foreign exchange deals on Tuesday, the European single currency fell to $1.1239 from $1.1285 late on Monday in New York.
Elsewhere Tuesday, travel group Thomas Cook saw its share price slide 1.37 percent to 137.70 pence on London's second tier FTSE 250 index, which was 0.51 percent lower.
Thomas Cook shares had risen 0.57 percent on Monday after it announced a joint venture selling holidays under its name in the world's second biggest economy.
The agreement will see domestic, inbound and outbound holidays sold in China through a business that will be 51 percent owned by privately owned Chinese conglomerate Fosun International, with Thomas Cook owning the remainder.
Wall Street stocks opened slightly lower Tuesday ahead of a two-day Federal Reserve meeting expected to shed light on the US central bank's timing to raise interest rates.
Five minutes into trade, the Dow Jones Industrial Average had slipped 0.03 percent to 17,786.43 points.
The broad-based S&P 500 dipped 0.04 percent to 2,083.61, while the tech-rich Nasdaq Composite Index shed 0.05 percent to 5,027.45.
Better jobs and retail sales data have altered the outlook somewhat for US monetary policy after a weak first quarter.
Asian stocks retreated for a second straight day, with Shanghai tumbling 3.47 percent on liquidity concerns as 25 firms launch initial public offerings, which drain funds from the market.
Tokyo shed 0.64 percent and Hong Kong ended 1.10 percent lower.
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