Stock Futures Slip, Euro Holds Drop as Greece Talks Fail – Bloomberg

(Bloomberg) — U.S. and Japanese index futures retreated, while the euro traded near a one-week low versus the yen after talks between Greece and its creditors broke down. Australian stocks dropped, while bonds climbed and crude oil held gains.

Standard & Poor's 500 Index futures dropped 0.5 percent by 8:43 a.m. in Tokyo, as trading resumed following Monday's U.S. holiday. Nikkei 225 Stock Average futures were bid down 0.2 percent on the Osaka pre-market, with the yen steady at 134.38 per euro, following three days of gains. The S&P/ASX 200 Index lost 0.6 percent as one of Australia's biggest banks slid after reporting a drop in loan margins. Ten-year Australian yields fell four basis points. U.S. oil was at $ 52.77 a barrel.

Discussions in Brussels ended abruptly Monday, with Greece rejecting as "absurd" and "unacceptable" a euro-area proposal to extend the nation's existing bailout conditions. Failure to strike a deal by Feb. 28, when the current aid expires, risks putting Greece's euro membership in jeopardy. Minutes of the Reserve Bank of Australia's last meeting, when interest rates were cut, are due Tuesday, while Indonesia and Korea review monetary policy. China reports on property prices.

"Once again Europe will remain an overarching risk story for investors," Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail. "Monetary policy will remain the biggest supporter of global equities, with or without Greece in the euro area. However, I would have a plan for Greece exiting the euro area as it will be volatile."

The Greek government accused Eurogroup Chairman Jeroen Dijsselbloem of backtracking on an agreement he made last week with Prime Minister Alexis Tsipras.

The European Union's commissioner for economic and monetary affairs, Pierre Moscovici, had put forward a draft statement ahead of the meeting that Greece was ready to sign up to, Greek Finance Minister Yanis Varoufakis told reporters after the talks. When finance ministers gathered Dijsselbloem put forward a different text that the Greeks could not accept.

Without a deal, Greece could run out of money by the end of March, forcing Tsipras to consider abandoning his promises to the electorate or even leaving the single currency.

The euro weakened against 14 of its 16 major peers Monday, while futures on the Euro Stoxx 50 Index slipped 0.4 percent after stock gauges from Greece to Germany retreated and three-year Greek bond yields jumped 174 basis points.

Markets in India, Sri Lanka, Taiwan and Vietnam are closed for holidays Tuesday, with mainland China to shut from Wednesday for the week-long New Year break.

To contact the reporter on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net

To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net John McCluskey