Greece casts shadow on European equities

Eurozone stocks slumped Tuesday as Greece once again cast a shadow over sentiment, but London rose as British investors nervously eyed the looming general election and played catch-up after a long holiday weekend.

London's benchmark FTSE 100 rose 0.41 percent to 7,014.33 points from Friday's close, with less than 48 hours to go until Britons head to the polls on Thursday.

The market -- boosted also by upbeat results from troubled global banking giant HSBC -- was shut on Monday for a public holiday.

Eurozone stock markets had also been trading higher, but slumped after the European Commission slashed Greece's growth outlook and Germany's powerful Finance Minister Wolfgang Schaeuble said he was sceptical a deal to unlock bailout aid could be reached before next week when Athens has to repay nearly one billion euros to the IMF.

Frankfurt's DAX 30 index shed 1.15 percent to stand at 11,486.36 points in afternoon trading and the CAC 40 in Paris fell 0.63 percent to 5,050.02 compared with Monday's close.

Madrid tumbled 1.28 percent and Milan 1.38 percent.

In foreign exchange trade, the European single currency weakened to $1.1137 from $1.1146 late in New York on Monday.

"The FTSE 100 has jumped higher, moving back above the 7,000 line as London shares play catch up with global markets after yesterday's market holiday," said analyst Tony Cross at traders Trustnet Direct.

"Gains are broad based ... shaking off any woes over the outcome of this week?s election, at least for now."

Britain's political leaders were facing a final frenetic 48 hours of campaigning from Tuesday ahead of the knife-edge vote.

Conservative Prime Minister David Cameron and Labour opposition leader Ed Miliband remain neck-and-neck and unlikely to win an overall majority, according to opinion polls.

That would spark uncertain and lengthy negotiations to form a new government, with power likely hinging on the performance of smaller parties such as the Scottish National Party and the Liberal Democrats.

"The focus is set to be on the election and then on the coalition negotiations which could be messy and which may take some time," warned senior currency strategist Jane Foley at Dutch lender Rabobank.

- HSBC slumps -

HSBC's share price initially rallied as investors welcomed news that first-quarter pretax profits advanced 4.4 percent to $7.1 billion on a solid performance at its investment banking division.

"Even a better than expected first quarter performance from HSBC couldn?t spark much excitement..." said Spreadex analyst Connor Campbell.

"Comments complaining about the difficulties of having a ?progressive? dividend policy, and a lack of news on its relocation tempered the buzz around HSBC, with the bank falling by around 2 percent as the day went on."

Its shares stood down 1.66 percent at 635.6 pence at 1342 GMT.

In Frankfurt, Lufthansa shares sank 2.71 percent to 12.40 euros, despite news that it flew back into the black in the first three months of the year.

Lufthansa said in a statement it booked a net profit of 425 million euros in the period from January to March, compared with a loss of 252 million euros a year earlier.

Earnings were powered partly by the good performance of its Swiss and Lufthansa Cargo subsidiaries.

In the United States, stocks opened lower Tuesday after the US trade deficit surged more than 40 percent in March to a six-year high.

The Dow Jones Industrial Average slipped 0.04 percent to 18,062.33 in the first five minutes of trading.

The broad-based S&P 500 shed 0.07 percent to 2,113.04, while the tech-rich Nasdaq Composite Index fell 0.26 percent to 5,004.07.

The US trade gap was $51.4 billion in March, jumping from a slightly upwardly revised $35.9 billion in February, the Commerce Department said.

The increase reflected the impact of the strong dollar and a surge in imports after the West Coast port strike ended in late February.

Briefing.com analyst Patrick O'Hare said the weak trade data will take the estimate for first-quarter gross domestic product lower, perhaps into negative territory.