PARIS: European stocks dipped on Tuesday as renewed worries over Greece offset the positive impact from news of a tie-up between Nokia and Alcatel-Lucent.
Shares in the French telecom gear maker surged 12.3 percent while its Finnish rival lost 6.5 percent after the two firms said they were in advanced talks for Nokia to take over Alcatel.
The deal added to a recent wave of M&A activity that has helped driven European shares higher. However, it wasn't enough to lift European equity markets overall as investors were spooked by a report saying Greece was preparing for a debt default if it did not reach a deal with its creditors by the end of the month.
Greece denied the Financial Times report and said the negotiations were proceeding "swiftly" towards a solution.
Shares in Greek banks skidded, with National Bank of Greece down 5.3 percent and Alpha Bank falling 6.7 percent.
"Even if there's been an official denial, investors remain concerned by the risks of a Greek default," Mirabaud Securities' senior equity sales trader John Plassard said.
Other euro zone banking stocks also lost ground, with UniCredit down 2.2 percent, Banco Santander off 2 percent and BBVA 1.6 percent lower.
Mining shares also dropped, along with metal prices as investors grew concerned about demand in top commodity consumer China a day before the country updates on economic growth.
Rio Tinto was down 1.6 percent and BHP Billiton fell 1.7 percent.
At 1000 GMT, the FTSEurofirst 300 index of top European shares was down 0.4 percent at 1,640.77 points.
Around Europe, Britain's FTSE 100 index was flat, while Germany's DAX index and France's CAC 40 were both down 0.7 percent.
Peripheral euro zone markets underperformed, with Spain's IBEX and Italy's MIB both 1.1 percent lower, halting their recent brisk rally.
European stocks have made strong gains so far this year, with the FTSEurofirst 300 up 20 percent, boosted by the drop in the euro currency as well as by the European Central Bank's asset-buying programme.
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