Markets drop as Greece heads for another election
Tuesday 15 May 2012
Markets slid on the news today that coalition government talks in Greece have failed after nine days of discussions, meaning the country is heading for another election next month.
The worry in the markets is that the next round may lead to the triumph of parties that want to scrap the country's bailout agreements with international creditors, which would put Greece's membership of the euro into jeopardy. The left-wing Syriza party, which came second in the vote on 6 May, has said the draconian terms of Greece's financial rescue agreements should be scrapped or rewritten.
Any faint hope that the parties would come to an agreement were dashed when Evangelos Venizelos, the leader of the PASOK socialist party said the talks had failed and another election would be held.
Having enjoyed some support early in the session, stocks in Europe were falling again, particularly in Athens, where the main exchange was down another 4.6 per cent.
Among Europe's main markets, the FTSE 100 index of leading shares was down 0.4 per cent at 5,443 while Germany's DAX fell 1 per cent to 3,389. The CAC-40 in France was 0.5 per cent lower at 3,044. The euro also fell, trading 0.3 per cent lower at $1.2794.
Wall Street opened steadily, helped by a strong manufacturing survey for the New York region and upbeat retail sales figures for April — the Dow Jones industrial average up 0.1 percent at 12,708 and the broader S&P 500 index the same rate higher at 1,340.
The focus over the coming weeks will likely centre on Greece. With opinion polls showing increasing support for Syriza, analysts expect a showdown between whatever new government comes to power in Greece and the country's bailout rescuers.
Earlier, stocks in Europe had been buoyed by the surprise news that eurozone economy did not fall into recession in the first quarter of the year. Output was flat compared with the previous three-month period, better than the 0.2 per cent drop that analysts had been expecting. A drop would have put the eurozone technically back into recession, which is defined as two consecutive quarters of economic contraction.
"In the current context, zero growth in the eurozone in the first quarter is relatively good news," said Marie Diron, senior economic adviser at Ernst & Young. "It suggests that the economy is not falling off a cliff under the burden of fiscal austerity."
Asian markets fell earlier today, with Japan's Nikkei 225 down 0.8 per cent to 8,900.74, its lowest close since 3 February. South Korea's Kospi lost 0.8 per cent to 1,898.96. Australia's S&P/ASX 200 lost 0.7 per cent to 4,266.30.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...