European stocks snap winning streak on Greek fears

LONDON (MarketWatch) � European stock markets ended lower on Monday, as Greek officials were trying to reach an agreement on austerity measures demanded by international lenders in exchange for a second bailout.

The Stoxx Europe 600 index XX:SXXP �closed 0.1% lower at 264.27, snapping a four-day winning streak.

Banking shares led decliners. Credit Agricole SA FR:ACA �closed down 2.7%, Societe Generale SA FR:GLE �lost 2.9% and BNP Paribas SA FR:BNP �inched 0.6% lower, helping drag the French CAC 40 index FR:PX1 �0.7% lower to 3,405.27.

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In Frankfurt, Deutsche Bank AG DE:DBK �fell 1.2%, while Commerzbank AG DE:CBK �shaved off 1.3%. The DAX 30 index DX:DAX finished marginally lower, slipping 0.03% to 6,764.83.

�Banks have outperformed significantly since late November, so it�s profit taking more than anything else,� said Edmund Shing, equity strategist at Barclays Capital in London.

European equities pared losses in afternoon trade after James Bullard, president of the St. Louis Federal Reserve Bank, said the U.S. housing market was bottoming out, which inspired optimism in Europe, according to Atif Latif, director of trading at Guardian Stockbrokers. Bullard also said he expects the U.S. unemployment rate to fall below 8% this year, according to Dow Jones Newswires.

Greek worries push markets lower

Greece was in the spotlight on Monday. Talks between Greek political party leaders were due to take place Monday, but were pushed back to Tuesday to allow the Greek prime minister to meet with creditors.

Sunday�s marathon meeting reportedly failed to lead to an agreement on further austerity measures and economic reforms required to receive a crucial second bailout to avoid default. Read more about Greece

�With some key stumbling blocks still unresolved, there is a real risk that Greece will not get another bailout from the EU,� said Danske Bank in a note.

Bucking the trend in European equities, the Athens General Index GR:GD �jumped 3% to 785.00, led by National Bank of Greece S.A. GR:ETE , which surged 11.4%. On Friday, the Greek index dropped 3.8% to 762.15, standing out amid the broadly higher European markets.

Resources fall on drop in commodity prices

The U.K.�s FTSE 100 index UK:UKX �fell 0.2% to 5,892.20, with Glencore International PLC UK:GLEN �falling 4.5% as investors digested news reports that the proposed merger with Xstrata PLC UK:XTA �might be investigated by the European Union competition commissioner. Xstrata shares were down 1.7%.

A spokesman from the European Commission said the institution hadn�t received any notification of the merger and could not confirm whether the body was investigating the deal. Glencore declined to comment and Xstrata was unavailable for comment.

Other mining shares fell, along with metals prices. Vedanta Resources PLC UK:VED �dropped 3.1%, Antofagasta PLC UK:ANTO �declined 2.6%, Kazakhmys PLC UK:KAZ �fell 2%, Fresnillo PLC UK:FRES �edged 1.8% lower, while Rio Tinto PLC UK:RIO �shed 1.1%.

Among gainers, gold producer Randgold Resources Ltd. UK:RRS �added 2.2% after reporting fourth-quarter profit rose more than four times. The company also said it has proposed to double its annual dividend.

In Frankfurt, utilities firm RWE AG DE:RWE �advanced 2.6% after HSBC upgraded the stock to neutral, citing potential future benefits from a low carbon price. The company also plans to cut another 3,500 jobs to save an additional 1 billion euros ($1.3 billion), according to an article in Financial Times Deutschland. RWE was unavailable to comment.

Also in the financial sector, shares of Julius Baer Gruppe AG CH:BAER �pulled back 3.8% after the bank reported a drop in full-year profit.

Wind-turbine maker Vestas Wind Systems A/S DK:VWS �shaved off 7.7%, posting the biggest loss in the Stoxx 600 index, after ING lowered its target price and kept a sell rating on the stock.