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
ebooks
ebooksA celebration of British elections
  • Get to the point
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

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before