LONDON (TheDeal) -- A global selloff of government bonds weighed on European stock indices on Tuesday amid little progress on a resolution to the Greek debt crisis.

Talks on Monday between Euro Group finance ministers and Greek counterpart Yanis Varoufakis failed to deliver a breakthrough that would trigger the release of €7.2 billion ($8.1 billion) in rescue funding. The cash-strapped country transferred €750 million owed to the International Monetary Fund just hours before a repayment deadline but Finance Minister Varoufakis spoiled any market-boosting benefit of that move with a comment that Greece could go bust "in a couple of weeks."

Inflation worries as oil prices recover have abruptly curtailed a rally in government bonds, with European markets taking their cue from a selloff in Treasury securities in the U.S. on Monday.

Southern European government bond yields rose in the double digits, and in Germany the yield on benchmark 10-year bond was up 7 basis points at 0.68%. Bond yields rise when prices fall, which is typically a response to the specter of higher inflation.

In the U.K., March industrial output and manufacturing sector figures from the Office for National Statistics beat consensus forecasts. The yield on U.K. gilts rose 7 basis points to 2.02%.

In London, the FTSE 100 fell 1.66% to 6,913.29. In Frankfurt, the DAX fell 2.28% to 11, 406.99. And in Paris, the CAC 40 dropped 1.91% to 4,931.71.

The Athens General Index was up marginally.

In London, OneSavings Bank fell after financial backer JC Flowers sold a 6.5% stake in a secondary offer. The buyout firm has also distributed a 1.3% stake to investors in its own funds. But consumer banking market leader Lloyds Banking (LYG) shrugged off a sale by the government of about £634 million ($986 million) of shares, which cut the state's stake to 19.9%.

EasyJet  (EJTTF) plunged as analysts cut full-year profit forecasts even after the airline swung into the black for the first time in 13 years in its traditionally quiet first half. Its pretax profit was £7 million -- at the upper end of guidance -- compared with a loss of £53 million a year earlier. But the company warned that disruption from French air-traffic control strikes last month would affect full-year results and it noted that price competition in the sector was increasing. It said forward bookings covering the critical summer season are in line with last year.

In Brussels, Delhaize (DEG) built on yesterday's gains as it confirmed that it is in preliminary discussions about merging with Royal Ahold of the Netherlands. Both food retailers have operations on the U.S. East Coast, as well as the Benelux region and Eastern Europe.

In Amsterdam, Ahold also gained. Jefferies International said it sees a 50% chance of Ahold buying Delhaize for €115 a share -- the stock was trading at around €85 on Tuesday morning -- and upgraded its recommendation on the latter to buy and on Ahold to hold.

Industrial conglomerate ThyssenKrupp (TYEKY) rose sharply in Frankfurt as it lifted its forecast for the full year. It expects adjusted EBIT of between €1.6 billion and €1.7 billion, up from €1.3 billion the year earlier.

It also said first-half sales rose by 9% to €21 billion and adjusted EBIT increased by 31% to €722 million as currency movements worked in its favor and the benefit of cost cuts fed through. ThyssenKrupp announced a new automotive supply joint venture in southwestern China.

Household products maker Henkel (HENOY) fell after agreeing to pay €220 million for Colgate-Palmolive (CL) laundry brands in Australia and New Zealand.

In Hong Kong, shares in Fosun International closed down 2.4% after trading resumed following its announcement that it would sell $1 billion of new shares and use some of the proceeds to fund insurance sector acquisitions.

The Nikkei 225 in Tokyo closed up 0.02% at 19,624.84 and the Topix closed up 0.25% at 1,602.27.

The Hang Seng closed down 1.12% at 27,407.18, though mainland Chinese indices closed up.

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