Debt fears keep markets gloomy

Persistent fears over the eurozone debt crisis ensured a gloomy start to the new quarter for embattled world markets today.





Greece's admission that it will miss its deficit targets and alarm bells over the health of Belgian bank Dexia spooked investors and saw further losses on markets on both sides of the Atlantic.



The FTSE 100 Index was 1% lower, while France's Cac-40 and the Dax in Germany were more than 2% down. Wall Street's Dow Jones Industrial Average was also lower as the London market closed.



The weak performance in London follows the FTSE 100's worst quarter in nine years, which saw around 14% wiped off its value in the three months to the end of September.







The Greek government's admission that it will miss its tough deficit reduction targets cast fresh doubts on whether it will be allowed the next tranche of its 110 billion euro (£94.4 billion) bailout.



The debt-stricken country has previously warned that, if it does not receive the money, it could go bankrupt within weeks, which would cause financial chaos.



Meanwhile, reports that Dexia is in need of a government bailout added to fears about the health of the banking sector.



As the cost of insuring bank debts across the world rose to levels not seen since the financial crisis, there is now speculation of another credit crunch as confidence in lending dries up.



The development hit the banking sector, with Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group all down more than 4%.



Traders are worried that political leaders do not seem to be able to tackle the problems of high debt and slowing economic growth in many western nations, which have plagued markets for months.



Cameron Peacock, market analyst at IG Markets, said no one has an answer to the problems, and as a result the markets continue to be "in a state of limbo".



He added: "Despite best intentions, politicians and central bankers have been unable to come up with any meaningful solutions and this has in turn eroded the market's confidence that there's any light at the end of the tunnel.



"Talk and speculation of what might happen has yet to translate into decisive action and, until it does, markets are sure to bounce around on high volatility, which in itself will act as a deterrent for retail investors in particular wading into the market."



Meanwhile, Standard and Poor's decision to affirm the UK's AAA credit rating and stable outlook had little impact on the market.



The move - a boost to Chancellor George Osborne - was accompanied with a downbeat assessment of the UK's "lacklustre" recovery.



S&P said low labour productivity, poor vocational education and insufficient investment in infrastructure would also hinder the rebalancing of the economy.

PA

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all