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Europe close: Stocks in the red on Greek debt default fears

LONDON (ShareCast) - European stocks were in the red on fears of a Greek debt default, which sent yields on debt of the Mediterranean country shooting higher. Overnight, Germany's finance minister Wolfgang Schaeuble said there was no chance Athens would achieve an agreement with creditors next week on economic reforms that would unlock further bailout funds.

On Wednesday, Standard & Poor's downgraded Greece's long-term sovereign rating to CCC+ from B-, with a negative outlook. The ratings agency said it thinks the Greek government will have exhausted its cash if there is no agreement by the time it has to cough up a €745m repayment to the International Monetary Fund (IMF) on 12 May. Greece's next payment to the IMF is due on 1 May for €200m.

The Financial Times earlier reported that Greece made an informal request to the IMF to have its repayments delayed but the fund later dismissed the claims.

"Despite the negative headlines, we think both sides still want to avoid the worst outcome," said Royal Bank of Scotland (LSE: RBS.L - news) analysts.

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"According to German newspaper Die Zeit, the German government is working on a plan to keep Greece inside the Eurozone even after a potential missed payment. The plan aims to ensure continued liquidity provision for Greek banks even if the sovereign misses a payment." Greek 10-year bond yields rose by 58 basis points to hit 12.68%.

The euro rose 0.42% to $1.0729.

Elsewhere in the bloc, the European Central Bank (ECB) published its Survey of Professional Forecasters for the second quarter, which supported President Mario Draghi's assertion on Wednesday that quantitative easing is helping bring inflation back towards the monetary authority's target of just below 2%.

The survey, conducted between 31 March and 7 April 2015, revealed upward revisions by economists to their inflation expectations for 2016 and 2017 to 1.2% and 1.6% respectively, both up by one tenth of a percentage point from the previous estimate.

"Our own view is that inflation, while trending higher reflecting energy-related base effects and the impact of the weaker currency, will remain subdued overall and lower than the ECB staff projections," according to BNP Paribas (Xetra: 887771 - news) analyst Luigi Speranza.

"This in turn should allow the ECB to continue its asset purchases according to plan, very much in line with Draghi's comments yesterday." In the US, a report on housing starts showed a 2% rise in March, well below the 15.9% increase expected.

Initial jobless claims climbed to 294,000 in the week to 11 April from 282,000 a week earlier. Analysts had predicted 280,000 claims.

Holcim (Other OTC: HCMLF - news) , SABMiller (Xetra: BRW1.DE - news) rise Holcim climbed after a major shareholder signalled that it may vote in favour of merger of the Swiss cement maker with French rival Lafarge (Paris: FR0000120537 - news) .

SABMiller advanced after the brewer reported quarterly beer sales that exceeded analysts' estimates.

Airbus Group NV gained after proposing a buyback of as much as 10% of its shares.

Unilever (NYSE: UL - news) jumped after the consumer goods company reported an increase in first quarter sales that surpassed forecasts.

In commodities, Brent crude was trading at $62.821 per barrel while West Texas Intermediate was at $55.73 at 17:04 BST, ICE data revealed.