Greek stocks crash on early presidential vote that could undermine bailout progress


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The Independent Online

The Greek stock market plunged by the most most in decades on concerns that the country is heading for a political crisis that could put at risk its bailout programme.

The Athens benchmark index tumbled 11.3 per cent in midday trading, the biggest one-day drop since 1987, after the conservative-led government brought forward the date of a presidential vote set for 17 December. If the ballot in parliament proves inconclusive, it could lead to general elections.

The market sell-off reflects fears that the main left-wing opposition party, Syriza, which is leading in the polls, might win the general election. Syriza has said it will demand a substantial cut to what Greece owes in bailout loans.

It hasn't clarified whether it would resort to unilateral action, a move that would lighten Greece's debt burden but would have other potentially negative repercussions. It might, for example, spook international investors away from lending the country money for years, hurting its ability to get back on its feet financially even after the economy improves.

Greece's president is a figurehead with minimal political clout. But the election requires a super-majority that would include backing from some opposition lawmakers, which appears beyond the reach of the struggling governing coalition.

If three successive votes, from Dec. 17-29, prove fruitless, general elections must be called by early February — nearly a year-and-a-half ahead of schedule.

In a televised address Tuesday, Prime Minister Antonis Samaras nominated Stavros Dimas, a senior figure in his conservative party and former EU commissioner for the environment, as the government's presidential candidate.

"Greek society appreciates him and the international community respects him," Samaras said.

All opposition parties have said they will not back any candidate the government puts forth, to force national elections.

Syriza is steadily leading polls, though without enough support to govern alone. Syriza opposes the European Union and International Monetary Fund bailouts that saved Greece from bankruptcy in 2010.

The bulk of the 240 billion euro ($294 billion) rescue loan program — from the EU — runs out this year, although European finance ministers on Monday gave Greece a two-month extension of the lifeline. That will allow conclusion of tough negotiations over whether Athens should impose more belt-tightening to qualify for the last aid installment.

Just after the extension was announced, the Greek government said it was bringing forward the date of the presidential election by about two months, to strengthen the country's negotiating position.

"The political uncertainty must end now," government spokeswoman Sofia Voultepsi said.

Additional reporting PA