European markets slide on Greece concerns

European markets pulled back on Tuesday as investors remained wary about progress on a deal to prevent Greece from defaulting, analysts said.

In late morning trading the CAC 40 in Paris dropped 0.53 percent to 4,998.46 points and in Frankfurt the DAX 30 fell 1.06 percent to 11,436.31 points.

Outside the eurozone, London's benchmark FTSE 100 index shed 1.00 percent to 6,884.05 points.

The euro rose to 1.0973 from 1.0924 late in New York on Monday.

European equities fell after high-level talks in Berlin between German Chancellor Angela Merkel, French President Francois Hollande, ECB chief Mario Draghi, European Commission President Jean-Claude Juncker and IMF chief Christine Lagarde late Monday on the Greek crisis apparently failed to result in a compromise between Athens and its creditors.

According to German daily Die Welt the aim was to come up with "a final proposal" to present to Athens, but Merkel's office said after the meeting only that the quintet agreed to work together "intensely" in the coming days and would stay in "close contact".

The EU's commissioner for Economic and Monetary Affairs, Pierre Moscovici, who did not attend Berlin meeting, said on Tuesday that "there is a solid basis to progress but we're not there yet", and "there are efforts to be made on both sides to get there".

Prime Minister Alexis Tsipras said on Tuesday that a "realistic" and "complete" reform plan had been submitted to its creditors.

Greece faces a key deadline on Friday when it is due to repay 300 million euros to the IMF. There are fears Athens does not have the necessary funds and will default, possibly setting off a chain of events that could end with a messy exit from the euro.

A new offer to Greece by its creditors might seek to lock-in the areas of agreement already reached and serve as a basis for emergency help.

- Deal for temporary aid -

Berenberg Bank senior economist Christian Schulz said such a deal "could be the basis for temporary aid from the eurozone, for example from the existing 10.9 billion euro bank bailout facility, to avoid a default and potential financial turbulences as well as give Greece more time to negotiate the remaining 30 percent of the adjustment programme."

Greece's radical left Syriza government, which was elected in January on an anti-austerity platform, has been negotiating for four months to unlock 7.2 billion euros in remaining bailout funds, but has been reluctant to accept more spending cuts and tax hikes to get the money.

It remains unclear just how far the EU and IMF will compromise, with the added complication that relaxing the fiscal targets would likely trigger IMF rules for a politically sensitive restructuring of Greece's debt to its eurozone partners.

Analysts said the markets would also be looking for direction from data releases, in particular the German unemployment rate, eurozone inflation, and US factory orders.

German unemployment fell in May to the lowest level in 24 years and eurozone inflation picked up to 0.3 percent from zero in April, both indicating stimulus efforts by the European Central Bank appear to be working.

The release of April US factory orders should provide further clarity about how strongly the US economy is rebounding from the 0.7 percent contraction in the first quarter due to bad weather.

A sluggish recovery "may serve to cool recently heightened expectations of Fed definitely hiking rates later this year..." analysts at Accendo Market said in a client note.

Data released on Monday showing US construction spending picked up strongly in April increased belief the US economy is rebounding after the winter stall and will prompt the Fed to begin raising rates had sent the dollar higher and in Asian trading it touched 125.05 yen -- its strongest level since December 2002.

Asian markets mostly fell Tuesday, with Tokyo snapping a 12-day rally, its best winning streak since a 13-day run in 1988 at the height of Japan's stock market bubble, easing by 0.13 percent.

burs-rl/txw