Markets falter as eurozone optimism fades

Markets have broken their three-day rally this morning, forced down by concerns some countries will be forced to take larger writedowns on Greek bonds.

As optimism faded in the eurozone the FTSE 100 fell 0.24% to 5,281 points in early trading and the EUROSTOXX 50 was down 0.22% to 2,188 following gains over the past few days.

Hopes that eurozone ministers were finally taking appropriate measures to rescue the floundering Greek economy and hints of a rate cut from the ECB pushed markets higher yesterday.

However, as arguments between ministers continue, markets fell back into negative territory.

Reuters reports German Chancellor Angela Merkel is calling for private creditors to take larger losses in a renegotiation of the second tranche of the €109bn bailout organised for Greece in early summer.

The "troika" audit team from the European Union, European Central Bank and IMF is to start discussions this morning.

Asia also posted losses overnight with the Shanghai index losing 0.94% to 2,392 and the Hang Seng Index declining 0.58% to 18,025. The Nikkei 225 was flat at around 8,615.

However the concerns had not yet spread to the US when markets closed yesterday. The S&P 500 was up 1.07% to 1,175 points.