Europe midday: Stocks in the red as hopes of Greek debt deal fades

LONDON (ShareCast) - Greek debt woes weighed heavily on European stocks after Germany's finance minister dashed hopes Athens would soon reach a deal with the Eurozone. Wolfgang Schaeuble said there was no chance Greece would achieve an agreement with creditors next week on economic reforms that would unlock further bailout funds.

His remarks came as 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 date of the second International Monetary Fund (IMF) payment (12 May). Greece owes the IMF €200m on 1 May and another €745m 11 days later.

"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. "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 provisions for Greek banks even if the sovereign misses a payment." The euro rose 0.39% to $1.0726.

Greek finance minister Yanis Varoufakis is meeting with US President Barack Obama today.

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

The survey, conducted between 31 March and 7 April 2015, saw upward revisions to inflation expectations for both 2016 and 2017 to 1.2% and 1.6% respectively, both up by 0.1% 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." Turning to the US in afternoon trade, reports on housing starts and initial jobless claims will be published.

SABMiller (Xetra: BRW1.DE - news) , Airbus edge higher 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. Holcim (Other OTC: HCMLF - news) 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) .

Energy stocks rallied for an eighth day as oil traded near at its highest price this year amid speculation that the US shale boom will ease. Brent crude was trading at $62.41 per barrel while West Texas Intermediate was at $55.55 at 12:04 BST, ICE data revealed.