European shares slip from highs

LONDON - Reuters

European shares slipped from near seven-month highs yesterday, with strategists saying the focus would now turn to the bleak outlook for Greece’s economy after the country secured a second bailout and averted a messy default.

Euro zone finance ministers sealed a 130 billion euro deal for Greece yesterday to avert a chaotic default in March.

“We’ve dodged the iceberg. We haven’t moved out of the ice field. There are no plans for growth (in Greece),” said Justin Urquhart Stewart, director at Seven Investment Management.

“Equities will find it difficult to make headway. Until we can see a path to growth (in Greece), there will be a draining away of the confidence that was coming back into the market. People will take a defensive posture in terms of stocks. We’ll see a lot more people just building up cash for the time being.” Urquhart Stewart said he favoured stocks such as food producers.

Yesterday morning, the FTSEurofirst 300 index of top European shares was down 0.1 percent at 1,090.12 points, having hit its highest close since July on Feb. 20.

Energy stocks were among the losers, down 0.6 percent after a strong run. Crude prices remained high, bolstered by a cut in Iranian oil supply.

Banks, many of which have taken a hit on their balance sheets due to the long-running eurozone debt crisis, reversed earlier falls.