European stocks dip as EU mulls Greek debt overhaul

Europe’s stock markets headed south in midday trade on Friday as the European Union said it was studying a possible Greek debt ‘rescheduling.’

Prior to the announcement, markets had been mostly rising as investors digested weak British manufacturing data, as well as the auto sector after Toyota unveiled a disappointing profits forecast.

International backers of a second bailout plan to ward off the threat of Greece defaulting on its massive debts are now studying a possible “rescheduling,” the European Commission said on Friday.

In reaction, London’s benchmark FTSE 100 index of top shares fell 0.31 percent to 5,838.76 points. The index was also weighed down by official data showing British manufacturing output slid 1.5 percent in April compared with activity in March.

Frankfurt’s DAX 30 eased 0.10 percent to 7,153.25 points and in Paris the CAC 40 index fell by 0.61 percent to 3,855.08 points.

The Stoxx 50 index of leading eurozone companies shed 0.37 percent to 2,767.97 points.

British manufacturing output was hit in April by the royal wedding and Japan’s tsunami disaster. Workers were given a day off on April 29 to celebrate the wedding of Prince William and Kate Middleton, while Japan’s natural disaster meant vital parts could not be sent abroad to Britain, hitting production.

Manufacturing output is suffering across the West as factories produce less amid slack demand for goods.

Japanese auto giant Toyota said it expected annual net profit to drop 31 percent to $3.5 billion on a strong yen and the effect on production of Japan’s recent natural disasters.

Shares in European car giants were mixed in reaction, with BMW up 0.38 percent at 63.16 euros and Daimler down 0.35 percent to 47.26 euros. Peugeot dropped 1.25 percent to 28 euros on a ratings downgrade by HSBC, traders said.

Asian markets closed mixed on Friday after the Dow in New York rose for the first time in six sessions overnight but a rate hike in South Korea and persistent fears over tightening in China kept dealers nervous.

The region was given an upbeat lead from New York, where markets were higher after the US trade deficit unexpectedly narrowed in April thanks to a recovery in exports and a dip in imports.