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 Euro zone finance ministers meet on Wednesday and EU leaders on
Thursday, but officials are already playing down chances of a
breakthrough.
European shares inched lower, led by a 3.8 percent drop in Greek
shares, while the euro and bonds from Greece, Portugal and Ireland
also dipped.
New Greek Finance Minister Yanis Varoufakis will spell out a plan to
drop his country’s bailout and end austerity at the meeting in
Brussels, and seek a temporary agreement to buy time until June for
a properly negotiated settlement.
The rest of the euro zone led by Germany, however, is sticking to
the view that Athens needs to push on with spending cuts and
privatizations if funding support is to continue.
"We have relatively low expectations about a solution being agreed,"
said Vasileios Gkionakis, UniCredit's Global Head of FX Strategy.
"I think this meeting is all about laying down the plans and
explaining where the two sides disagree. And I think it will set the
stage for some increased volatility over the next few days."
As the euro sagged to $1.1313 under the Greek uncertainty, the
dollar remained firm as traders continued to bet on the first U.S.
interest rate hike in almost a decade later this year.
The dollar hit a one-month high against the yen of 119.77 bolstered
by a recent rise in Treasury yields - a reflection of rate hike
expectations. Trade was thin, though, with Japanese markets closed
for a public holiday.
UKRAINE TALKS
Tokyo's day off kept moves in other Asian equity markets in check.
MSCI's broadest index of Asia-Pacific shares outside Japan ended off
0.3 percent. Australia's main index <.AXJO> slipped 0.6 percent to
offset a 0.2 percent gain for shares in Shanghai.
In commodity markets, U.S. crude futures bounced 40 cents to $50.42
a barrel on news of a smaller-than-expected rise in crude
inventories. Brent crude gained 25 cents to $56.71, having shed
$1.91 on Tuesday.
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Traditional safe haven gold rose 0.3 percent to $1,237.70 an ounce,
reversing a similar drop on Tuesday, while copper climbed to $5,657
a tonne as traders prepared to wind down for the Lunar New Year in
the metal's biggest market, China.
The rouble fell before talks between Russia, Ukraine, France and
Germany in Belarus aimed at bringing an end to fighting in eastern
Ukraine, with analysts predicting volatile trading.
Ahead of the meeting, Ukraine said 19 soldiers had been killed in
rebel attacks near the strategic town of Debaltseve, while rebel
representatives denied an earlier report that a ceasefire had been
agreed.
There was also move volatility in Nigeria, one of Africa's largest
economies. The naira lost more ground as it slipped to 202.75 to the
dollar <NGN=D1>
It has hit repeated record lows this week after a delay to
presidential elections stirred concerns about political stability
and amid fears about the central bank's ability to manage a currency
hammered by weak oil prices.
(Reporting by Marc Jones; editing by John Stonestreet)
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