World Economy

Greek Standoff Saps Europe

Greek Standoff Saps EuropeGreek Standoff Saps Europe

European shares hit a near four-month low and yields on lower-rated eurozone sovereign debt climbed to their highest point since November, as financial markets braced for the possibility of Greece defaulting on its debt.

Markets were also cautious ahead of the start of a two-day meeting of the Federal Reserve late Tuesday, the latest step towards the US central bank's first rise in interest rates in almost a decade.But the focus remained squarely on Greece's fate in the eurozone after both Athens and its creditors hardened their stances following the latest breakdown in talks.

Greek Finance Minister Yanis Varoufakis told a German newspaper that he is not planning to present new reform proposals at a Eurogroup meeting on Thursday, despite warnings from the rest of Europe that time is running out, Reuters reported.

Asked if he would present new plans, Varoufakis said: "No, because the Eurogroup (of eurozone finance ministers) is not the right place to present proposals which haven't been discussed and negotiated on a lower level before."

Germany's DAX, France's CAC and stock markets in Italy  and Spain fell 0.7-1.5% as they extended their losses over the last few weeks to between 6 and 8%. Britain's FTSE was down 0.5%.

The lure of the safety of German government debt also remained strong as Bund yields dropped, periphery eurozone yields pushed higher and the euro remained highly volatile in the currency market. Traders were trying to position too for the Federal Reserve meeting, which will conclude on Wednesday with a quarterly news conference and provide updated forecasts. Global equity markets were feeling the pinch of combined Greek and Fed uncertainty.