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While you were sleeping: EU and Greece at odds

European stock markets closed lower, giving up earlier gains, as investors swung from optimism to pessimism about the potential for a deal between Greece and its international creditors about the conditions of its bailout-and with that the future of the euro.

Before the talks on Monday German Finance Minister Wolfgang Schaeuble warned on Deutschlandradio that weekend discussions failed to make sufficient progress in identifying common ground, Bloomberg reported.

"From what I've heard about the technical discussions at the weekend, I'm very skeptical," Germany's Schaeuble said. "But we'll get a report today and then we'll see."

Indeed Monday talks between euro-zone finance ministers, the so-called Eurogroup, in Brussels about interim funding for the indebted Greek nation proved difficult after Greece rejected a draft proposal as "unreasonable" and "unacceptable."

The proposal was that Greece should accept a six-month extension of its international bailout program while sticking to the terms of its agreement with lenders, according to Reuters.

"All eyes are on the meeting between Greece and Europe," Ramiro Loureiro, a Lisbon-based market analyst at Banco Comercial Portugues's Millennium unit, told Bloomberg Business. "Investors are proving to be cautious regarding the outcome."

The euro dropped 0.4 percent to US$1.1344, after earlier in the day rising as much as 0.3 percent.

The Stoxx Europe 600 Index ended the day with a 0.1 percent decline from the previous close.

The FTSE 100 Index fell 0.2 percent, as did France's CAC 40 Index, while Germany's DAX slid 0.4 percent. Greece's Athens Stock Exchange General Index dropped 3.8 percent.

"The market consensus is for them to do a deal by the end of this week," Susanne Galler, a strategist with Jefferies in London, told Reuters. "But we think that if there's no deal today and the clock starts ticking then the euro will look increasingly vulnerable."

US financial markets were closed for the President's Day public holiday on Monday.

Oil moved higher amid concern about escalating violence in Libya. Egypt's air force bombed Islamic State targets in Libya after the extremist group released a video purporting to show the beheading of 21 Egyptian Christians.

Benchmark Brent futures added 28 cents to US$61.80 a barrel after earlier in the session touching US$62.57 a barrel, the highest in two months.

"A lot of the oversupply is very tenuous, and that's why we are prone to rebound," John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, told Bloomberg. "We are on a tripwire really."

Copper ended little changed and volumes continue to thin ahead of the start, later this week, of the China Lunar New Year.

Gold, in contrast, extended its advance in part due to concerns about the talks between Greece and its EU partners as well as a weaker US dollar.