Eurostoxx 50:2,902.40 (–50.50) Frankfurt DAX:7,410.72 (–81.53) Paris CAC:4,007.26 (–50.75)

EUROPEAN STOCKS retreated yesterday, after officials agreed to review the terms of Greece’s bailout and Standard and Poor’s downgraded the nation’s credit rating, reigniting concern about the sovereign-debt crisis.

The benchmark Stoxx Europe 600 Index fell 0.3 per cent.

“We all know that a lot of these economies are heading towards default and there is a lot of keeping balls in the air going on,” said director of asset allocation at Fidelity International Trevor Greetham. “The markets are forcing them to tighten fiscal policy and the trouble is it’s weakening their economies. Yields are rising and the more that happens the worse the situation is.”

Greece’s ASE Index retreated 1.5 per cent as National Bank of Greece sank 4.1 per cent to €4.72.

The European Union agreed in an unannounced meeting on May 6th to ease the terms of the €110 billion lifeline Greece received last year. The gathering followed a report in Der Spiegelmagazine that Greece may withdraw from the euro.

Espirito Santo, Portugal’s biggest publicly traded bank by market value, dropped 2.7 per cent to €2.96 and Banco Bilbao Vizcaya Argentaria, Spain’s second-largest bank, slid 3.1 per cent to €8.18.

HSBC fell 0.8 per cent to 646.5p as chief executive officer Stuart Gulliver said it may take as long as three years to meet the bank’s cost-reduction target.

Thomas Cook dropped 3 per cent to 165.5p after Europe’s tour operator said its first-half loss widened to £166 million because of the cost of assisting holidaymakers affected by revolts in north Africa.

MAN limited losses in the Stoxx 600, climbing 1.8 per cent to €98.26 after Volkswagen raised its stake in the truck maker and said it will boost the holding to as much as 40 per cent.

VW increased its holding in MAN to 30.47 per cent, requiring Volkswagen to make a mandatory bid for the entire company. Europe’s largest car maker offered €95 per common share. VW shares retreated 2.2 per cent to €127.6 in Frankfurt.

Misys surged 8.6 per cent to 344.3p as Credit Suisse reinstated coverage of the UK provider of software for the financial industry with an “outperform” rating. – (Bloomberg)