Stocks on both sides of the Atlantic moved lower ahead of a Greek referendum this Sunday, while a US jobs report threw doubt over expectations the Federal Reserve will hike rates in September.
A survey showed the outcome of Sunday's referendum on the latest bailout offer from the nation's creditors is too close to call; 47 per cent of Greek voters leaned toward a "yes" vote, in favour of the bailout, while 43 per cent agreed with the government which is pushing for a "no" vote.
Europe's Stoxx 600 Index ended the session with a 0.4 per cent decline from the previous close. Germany's DAX dropped 0.7 per cent, while France's CAC 40 Index shed 1 per cent. The UK's FTSE 100 Index rose 0.3 per cent, boosted by BP's settlement of claims arising from its 2010 oil spill in the Gulf of Mexico.
The International Monetary Fund, among Greece's international creditors, said Greece needs at least 36 billion euros over the next three years and that the current debt repayment schedule will need to be adjusted.
"Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable," according to the IMF in a summary of the report.
"To ensure that debt is sustainable with high probability, Greek policies will need to come back on track but also, at a minimum, the maturities of existing European loans will need to be extended significantly while new European financing to meet financing needs over the coming years will need to be provided on similar concessional terms."
"But if the package of reforms under consideration is weakened further-in particular, through a further lowering of primary surplus targets and even weaker structural reforms-haircuts on debt will become necessary," the IMF noted.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.29 per cent, the Standard & Poor's 500 Index slid 0.23 per cent, and the Nasdaq Composite Index declined 0.30 per cent. On Friday US markets are closed for the Independence Day holiday.
The latest jobs data made some question the likelihood of a Federal Reserve interest rate hike in September, for which some investors have been positioning. Nonfarm payrolls rose 223,000 in June, down from 254,000 in May, according to the Labor Department. The jobless rate fell to 5.3 per cent, the lowest level in seven years, because people stopped looking for work.
"It is a slightly disappointing payroll number. If anything, it buys the Fed a little more time before the first rate hike," Wilmer Stith, a fixed income portfolio manager at Wilmington Trust in Baltimore, told Reuters.
Average hourly earnings were unchanged May and increased 2 per cent over the past year. The participation rate fell to 62.6 per cent, the lowest since October 1977, from 62.9 per cent.
"The Fed will need to see a strong bounce back in participation to stick to their guns and achieve liftoff in September," Diane Swonk, chief economist at Mesirow Financial in Chicago, told Reuters.
US Treasuries rose, pushing yields on the benchmark 10-year note five basis points lower to 2.38 per cent.
"The Fed would very much like to raise interest rates in September, and we think they will, but it is far from a sure thing," Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, told Bloomberg.
In the Dow, declines in shares of DuPont and those of UnitedHealth, down 2.1 per cent and 1.7 per cent respectively, outweighed gains in shares of Intel and those of Exxon Mobil, last up 1.3 per cent and 1 per cent respectively.
Cigna has had its first meetings with competitor Anthem after it rebuffed Anthem's US$47 billion merger proposal last month, Reuters reported, citing a person familiar with the matter. It was not immediately clear if the new talks, which were held in the last few days, would lead to the companies reaching a deal.
Shares of Cigna last traded 0.7 per cent lower, while those of Anthem were 1.3 per cent weaker.