EUROPE MARKETS: European Stocks Rise As Greece Shakes Up Team Handling Debt Talks

By Carla Mozee, MarketWatch

European stocks reversed course, moving higher Monday, following reports that Greece has made changes to a key team negotiating with its international creditors.

Meanwhile, a boardroom shake-up has pushed shares of car maker Volkswagen AG higher, but Deutsche Bank AG shares were lower as the banking heavyweight reported that legal costs undercut its earnings.

The Stoxx Europe 600 rose 0.4% to 410.19, with all sectors climbing out of the red to trade higher.

In Frankfurt, the DAX 30 reversed course and rose 1% to 11,925.03. Volkswagen AG shares topped the DAX, rising 3.7% after the car maker's chairman, Ferdinand Piech, unexpectedly resigned (http://www.marketwatch.com/story/volkswagen-chairman-piech-resigns-2015-04-26) over the weekend following a failed move to oust Chief Executive Martin Winterkorn.

But Deutsche Bank (DB) shares were putting in the worst performance as they fell 4.2%, the worst session since January 2014, according to FactSet data. The largest bank in Germany said first-quarter net profit dropped about 50% (http://www.marketwatch.com/story/deutsche-bank-profit-halves-on-litigation-costs-2015-04-27) to 559 million euros ($607.8 million), cut down by penalties the company agreed to pay to settle allegations over manipulating the London interbank offered rate, or Libor.

In Paris, the CAC 40 switched higher, rising 0.5% to 5,228.49, and the U.K.'s FTSE 100 tacked on 0.3% to 7,093.33 (http://www.marketwatch.com/story/ftse-100-moves-lower-but-hsbc-outperforms-2015-04-27). Shares of HSBC Holdings PLC rose 3.1%, the best on the Stoxx 600, following a Sunday Times report the lender is weighing a deal valued at 20 billion pounds ($30.4 billion) to spin off its British retail bank.

Greece: Greece's Prime Minister Alexis Tsipras has made changes to the Greek team (http://www.reuters.com/article/2015/04/27/us-eurozone-greece-varoufakis-idUSKBN0NI0VI20150427) that is negotiating with its international creditors, according to media reports Monday afternoon. The move could reduce the influence that Greek Finance Minister Yanis Varoufakis has on the talks, which have been criticized moving too slowly. Euclid Tsakalotos, Greece's alternate foreign minister, will head a new policy negotiating team, The Wall Street Journal reported (http://www.wsj.com/articles/greece-shuffles-team-negotiating-with-creditors-1430135685?KEYWORDS=greece).

Greece's Athex Composite turned up by 1% to 769.06. Meanwhile, the yield on 2-year debt slipped 10 basis points to 25.19%, as prices rose.

European stocks in recent weeks have seen bouts of selling in part on fears that Greece appears unlikely to reach a deal with creditors and that it will leave the eurozone.

"The situation in Greece is continuing to drag on and people are losing patience," said Jameel Ahmad, chief market analyst at FXTM, adding that he believes Greece will be able to stay in the eurozone.

"There is an argument that in the longer-term, the European economy might be better without its weakest member. However, I don't believe the euro would not be vulnerable to sudden losses if Greece leaves [the eurozone]," Ahmad said. "Greece has the potential to be the factor that sends the euro to parity," against the greenback, he said.

The euro (EURUSD) has managed to push back above $1.08 against the U.S. dollar, largely because of dollar-softness after weaker-than-expected U.S. economic data.

For equities, the longer-term prospects "are looking very bullish," Ahmad said. The ECB's asset-buying program is set to run through September 2016, and "if it continues to have the desired impact on economic data, then European stocks have the room to continue moving higher."

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