LONDON: Athens stocks fell in choppy trade on Tuesday to hinder European shares after debt talks between Greece and euro zone finance ministers broke down, putting the country's future in the euro zone at risk.
The main Athens index fell as much as 4.7 percent following the open. It then recovered the lost ground only to drop once more, leaving it 2.5 percent down by 1100 GMT.
After the market close on Monday, Greece rejected a proposal for a six-month extension of its international bailout package as "unacceptable", setting it at odds with its creditors.
However, Greece said it was "cautiously optimistic" a deal would be found, and traders said that the market was pricing in the prospect of a last minute deal.
"I'm certain that a deal will be done. It's in no one's interests for Greece to leave the euro," said Joe Rundle, trader at ETX Capital.
Greek banks dropped 9.3 percent early in the session, but recovered slightly and were down 4.6 percent at 1100 GMT. Euro zone banks, which have a large exposure to the region's sovereign debt market, rallied off lows to be up 0.2 percent.
In all, the Euro STOXX 50 was down 0.7 percent, while the pan-European FTSEurofirst 300 index was down 0.2 percent at 1,499.41 points.
Telecoms came under pressure, led lower by France's Orange, which had hit a four-year high hit in the previous session.
It slid 3.2 percent after predicting operating profit would fall slightly this year amid continued tough competition in its key home market of France. It pledged to hold the line on costs to be able to deliver a stable dividend.
Sector peer Telefonica fell 1.4 percent after it said it would change the exchange rate it will use in Venezuela, adding that the shift would hit earnings.
Danish jewellery maker and retailer Pandora surged 16.6 percent after it reported fourth-quarter operating profit above expectations, and said its profit margin will rise in 2015.
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