LONDON—-European stock markets continued to teeter between small gains and losses Friday, as investors reacted to the strong uptake to Greece's proposed €206 billion ($273.47 billion) private-sector debt restructuring, but many still questioned the implications of the deal.
The benchmark Stoxx Europe 600 Index was recently 0.1% higher at 264.56. London's FTSE 100 Index was flat at 5855.18, Paris's CAC 40 Index rose 0.1% to 3481.02 and Frankfurt's DAX was 0.2% higher at 6854.83. In terms of sectors, bank stocks pared gains to trade lower with the Stoxx Europe 600 index for the sector trading down 0.5%.
The private-sector commitments clear the way for Greece to secure the second tranche of its bailout package. Under terms of the bond swap announced by the Greek government early Friday, Greek bonds worth €172 billion were tendered out of the total €206 billion held by private investors, equating to an overall participation rate of 83.5%.
The figure is ahead of expectations for a participation rate of 75% to 80%, but still falls short of the 90% target that would have allowed the swap to be completed on a voluntary basis. Consequently, the Greek government has said it may activate the collective action clauses on debt holdouts, which would lift the participation rate to 95.7%.
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Concerns surrounding the impact of a Greek credit-default swap being triggered will remain—with the International Swaps and Derivatives Association Committee due to meet at 0800 ET to decide on this—but the high level of acceptances will be seen as a success by European policy makers, said Dermot O'Leary, an economist with Goodbody Stockbrokers.
"The restructuring will not solve Greek debt problems overnight and not slow the austerity measures, but it is a necessary, if not sufficient, condition for Greece to return to sustainable debt levels. It remains to be seen whether sovereign market will believe European policy makers' assertions that it is indeed a 'unique situation'," added Mr. O'Leary.
And the market's unease over Greece's future prospects was reflected in gray market levels for the new Greek bonds that are yet to be issued. New Greek bonds maturing in 2042 were quoted between 15 and 17 cents, according to a message reviewed by Dow Jones Newswires. Bonds due in 2023 were quoted between 20 and 22 cents, indicating that another restructuring is likely.
"This tells us that investors think that Greece is still a high-risk investment, that it will need more bailout money, it still does not have a sustainable level of debt and that Greece may default again in the future," said Louise Cooper, a market analyst with BGC Partners.
Friday's corporate news was rather upbeat, with shares in the London Stock Exchange Group gaining 9% after it announced it has agreed to pay €463 million for a 60% stake in London clearinghouse LCH.Clearnet Group Ltd., enabling the exchange operator to capture a larger share of the derivatives market.
Aggreko shares rose 2.6%, after the supplier of temporary power and temperature control reported a rise in full-year profit and said it continues to believe that it will deliver another year of good growth in 2012.
Meanwhile, the euro was a little weaker against the dollar, although off lows reached immediately after the Greek announcement and bond markets were fairly calm. The common currency was recently fetching $1.3217 from $1.3274 late Thursday in New York, while, the dollar was at ¥81.82 from ¥81.55.
In the bond markets, the 10-year Italian bond yield was 0.05 percentage point lower at 4.75%, according to Tradeweb data, while the corresponding Spanish bond yield was down 0.11 percentage point at 4.93%. At the same time, the June bund futures contract was up two ticks at 138.37.
The attention turned to a teleconference between euro-zone finance ministers currently being held, in which ministers are to discuss what happens next regarding the second tranche of Greece's bailout funds. Greece will take the final decision whether to use the clauses during the conference call.
Also prompting a degree of caution was the coming monthly U.S. jobs report at 0830 ET, viewed as a key indicator on the health of the world's largest economy. Economists expect payrolls to gain by 213,000 and the jobless rate to stay unchanged at 8.3% in the month, according to the results of a survey by Dow Jones Newswires.
Ahead of the jobs report, the Dow Jones Industrial Average front-month futures contract was recently flat at 12845, and the S&P 500 futures contract was also flat at 1360.3.
Among commodities, spot gold was at $1,699.50 a troy ounce, up $1.70 from its New York settlement Thursday. April Nymex crude oil futures were up 23 cents at $106.81 and April Brent oil futures were down 37 cents at $125.07.
Write to Michele Maatouk at michele.maatouk@dowjones.com
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