LONDON: Europe's main stock markets were mixed Tuesday despite confirmation by Greece it would not make a debt payment due to the International Monetary Fund, placing it on course to default.
In mid-afternoon deals Tuesday, most markets were showing modest gains after have been down most of the day.
In Paris the CAC 40 edged up 0.02 percent to 4,868.52 points compared with Monday's close, while Madrid's IBEX 35 was up 0.51 percent and Milan's FTSE Mib increased 1.02 percent.
By contrast, Frankfurt's DAX 30 declined by 0.04 percent to 11,079.23 points.
London's benchmark FTSE 100 index lost 0.48 percent to 6,588.72 points, with investors also reacting to news that although Britain's economy grew faster-than-expected in the first quarter, but the pace slowed from the end of 2014.
Activity across European markets followed a jittery session Monday, when the Frankfurt and Paris indices both closed down more than 3.5 percent over fears Greece could be heading for a eurozone exit.
The prospect of that increased Tuesday after Greece's Finance Minister Yanis Varoufakis said Athens will not pay the IMF about 1.5 billion euros ($1.7 billion) due.
Despite that development, hopes linger that a wider agreement between Athens and its creditors may be found in coming days to avert investors' greatest fear of Greece crashing out of the eurozone.
"Dealers are protecting themselves against a possible default, but deep down there is a sense that some sort of compromise will be reached," said David Madden, market analyst at IG trading group.
That same outlook shaped opening activity on Wall Street Tuesday, where five minutes into trade the Dow Jones Industrial Average was up 0.58 percent at 17,698.92 points.
The broad-based S&P 500 rose 0.72 percent to 2,072.52 points, while the tech-rich Nasdaq Composite Index jumped 0.75 percent to 4,995.57.
Despite Varoufakis confirmation Greece won't honour the IMF payment, Wall Street fears of a default "are being soothed somewhat by reports that a last-second deal may still be achieved," said an investor note from Charles Schwab.
Defiant Athens has urged Greeks to reject creditors' demands for tough reforms in a weekend referendum, despite warnings that this would lead to a chaotic Greek exit from the eurozone.
Thousands took to Greece's streets on Monday night to support their government's opposition to the latest debt proposals, after a clash with the country's creditors forced a shutdown of its banks and brought the country close to financial collapse.
Failure to pay could see Greece become the first country to default on the International Monetary Fund since Zimbabwe in 2001, and in terms of standards of living, it would be the wealthiest.
In foreign exchange Tuesday, the euro dropped to $1.1210 from $1.1247 late in New York on Monday.
Lee Hardman, a London-based currency analyst at Bank of Tokyo-Mitsubishi, pointed out that "the negative developments regarding Greece are increasing downside risks for the euro."
"At this stage although the risk of 'Grexit' have increased, the market is still comfortable that the more likely scenario remains that Greece will remain within the eurozone which is limiting euro weakness in the near-term."
A one point on Monday, the single currency tumbled below $1.10 before pulling back late in the day.
Elsewhere, Asian stock markets rebounded after the previous day's rout, with Shanghai surging at the end of a volatile day to finish with a gain of 5.53 percent.
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