European stocks, euro slip on Greece uncertainty

European stock markets closed slightly lower on Friday and the euro slipped as investors locked in profits, waiting to see whether Greece can finally strike deals to cut its towering debt mountain. By the European close, the pointers were that there would be a deal but the devil will be in the details, with some analysts suggesting there might in the end be no clear cut resolution of the crisis which has dragged on for months. Wall Street provided some support with modest gains after what has been a much better week for the markets but ahead of the weekend no one wanted to be too adventurous. In London, the FTSE 100 index of leading shares closed down 0.22 percent at 5,728.55 points. In Paris, the CAC-40 index also fell 0.22 percent, to 3,321.50 points and in Frankfurt the DAX 30 slipped 0.18 percent to 6,404.39 points. Milan fell 0.13 percent as investors there waited for the government to present a list of reforms aimed at liberalising closed professions and other sectors in the hope of giving growth a vitally needed boost. Madrid was off 0.49 percent. The euro dropped to $1.2930 from $1.2961 in New York late Thursday. In New York, stocks were narrowly mixed, with solid earnings from Microsoft and IBM providing some support as investors waited for news from Greece. The blue-chip Dow Jones Industrial Average was up 0.32 percent at midday while the tech-rich Nasdaq Composite fell 0.34 percent. Investors were "keeping a cautious eye on Greece, with the cash-strapped nation's government meeting with both private creditors and debt inspectors from the European Union, European Central Bank, and International Monetary Fund," said Andrea Kramer of Schaeffer's Investment Research. After months of talks, a deal on banks writing down a huge chunk of the Greek debt they hold could be a major step toward stabilising the eurozone. Dealers in Europe said the markets continued positive after France and Spain, downgraded last Friday by Standard and Poor's, successfully raised fresh funds. "Yesterday's positive outcomes from the bond auctions of France and Spain have given the beleaguered euro a welcome respite from its recent woes but significant headwinds still remain, not least ... Greece," said Michael Hewson, market analyst at trading group CMC Markets. "Even if a deal is reached it won't even begin to solve Greece's problems of a shrinking economy and a growing debt burden." Greece needs to clinch debt-saving deals in parallel negotiations with private creditors and its EU-IMF bailout partners ahead of a looming default in March. Greece is seeking to slash around 100 billion euros ($129 billion) from its huge debt through what would be touted as a voluntary bond swap with creditors, a process that would unlock a new eurozone rescue package worth 130 billion euros overall. European stocks and the euro rose solidly Thursday following the upbeat economic news on both sides of the Atlantic. "Positive eurozone debt auctions, better US data, a strong January for stock markets and hopes that Greece will avoid a messy default in March are all contributing to the current 'risk on' sentiment in markets," said Jane Foley, senior currency strategist at Rabobank.