EU Indices mixed as eyes remain on Greek debt talks and US GDP

European indices traded mixed on Friday, with the German DAX gaining small ground whilst the FTSE 100 and French CAC fell slightly with investors enticed into locking in early gains in mining stocks after a stellar performance in this sector yesterday.

We have seen a bit of a slow start to trading today, with many investors happy to sit on their hands somewhat after yesterdays bounce higher from Wednesday’s lows. However, with talks ongoing between private creditors of Greek debt and Greece over bond haircuts and US GDP figures due out at in the early afternoon, investors are naturally refraining from delving too deep into the markets today as both of these elements could send a few ripples into the stock market waters.

Greece talks eyed
Certainly the continuation of talks between Greece and its private creditors is maintaining a watchful edge to trading this week.

Whilst many investors believe that a deal will emerge before the March redemptions that could force Greece to default, constant disappointments over potential deals within the Eurozone over the past year dictates that traders maintain a watchful eye over developments for surprises. In this sense, traders may do well to be mindful of a ‘buy the rumour sell the fact scenario’ that could emerge here.

At the very least, the negotiations is fast turning into a tv soap opera and just like soaps tend to finish the week at a tipping point of high drama, one hopes this is not the case with Greek bond talks this time around.

US GDP could see an interesting reaction
The US GDP figure could be a very interesting figure however. Data out at 1.30pm is expected to show that the US economy grew at its fastest pace in nearly two years at the end of 2011, by 3%.

Considering much of the support seen for stocks this week has come from optimism that the Federal Reserve will continue to adopt an accommodative stance through to 2014, with potential room for more quantitative easing, a stronger than expected GDP reading today could leave a rather mixed reaction from investors. On the one hand, a stronger GDP is both a good sign for the US economy, and that of global growth, but on the other hand, it may threaten the tools the Fed has at its disposal to stimulate growth. As such, any potential jump higher in stocks from a stronger reading may be threatened once investor adrenaline wanes.

BP shares lag on ruling
BP shares are the leading faller in UK trade however, with prices falling 1% after a federal judge ruled that the oil giant must indemnify Transocean Ltd for compensation claims over the gulf of Mexico oil spill.

From a sector perspective, we have seen small gains in financial stocks and profit taking in both the miners and oil firms after yesterdays charge higher. Retail stocks have also enjoyed gains today, with the FTSE 350 retail sector gaining over 0.7% in trading.”