Europe stocks fall from 7-year high on Greece, US rate concern

By Inyoung Hwang

European stocks declined after a five-week rally as concern resurfaced over Greece and the timing of an interest-rate increase in the U.S.

The Stoxx Europe 600 Index lost 0.2 percent to 393.32 at 12:49 p.m. in London after falling as much as 0.9 percent. Greece?s ASE Index slid the most among 18 western-European markets after European officials said the nation?s latest reforms in exchange of a bailout fell short of what was tabled two weeks ago and Greece?s ministers floated the prospect of a referendum if their proposals are rejected.

The Stoxx 600 pared gains on Friday as U.S. payrolls rose more than estimated in February, spurring speculation that the Federal Reserve would start raising interest rates sooner.

?In the very short term it seems European markets are overbought and due for a pause,? said Raimund Saxinger, who helps oversee $22 billion as a fund manager at Frankfurt-Trust Investment GmbH. ?Greece is just a short-term worry. Perhaps markets have became too complacent about Greece, but in the longer term it will not have an influence on stock markets. Right now, the U.S. is important. I can?t imagine European stocks just pushing forward if the U.S. corrects.?

The Greek ASE lost 3.8 percent, heading for its lowest level in almost a month, with National Bank of Greece SA and Piraeus Bank SA down more than 8 percent. National stock gauges of Italy and Portugal rallied the most among western-European markets, up more than 0.4 percent.

The Stoxx 600 completed its longest weekly winning streak since June, closing at its highest level since July 2007, as the European Central Bank said it would start its asset-purchase program. It bought German, Italian and Belgian bonds on Monday, according to traders...