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.
Wellcome Image Awards: The most striking images from the world of science, including breast cancer cells under chemical attack and a photographer’s own kidney stone
Missing Malaysia Airlines plane: Terrorism explanation 'cannot be ruled out', says CIA
Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
Oscar Pistorius murder trial: Athlete repeatedly sick as court hears 'graphic details' of Reeva Steenkamp's post-mortem
How climate change helped Genghis Khan: Scientists believe a sudden period of warmer weather allowed the Mongols to invade with such success
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
- 1 Bad cattitude: Family call police after crazed and 'hostile cat with a history of violence' attacks baby before attempting to 'flee custody'
- 2 Family forced to flee home after discovering 'terrifying' nest of spiders in bananas
- 3 First Kiss: Filmmaker gets 20 strangers to make out on YouTube with awkward results
- 4 Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 5 Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
iJobs Money & Business
£1000 per month: Inspiring Interns: The company works with Tier 1 FTSE 100 Ban...
£35000 - £60000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£60000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A top, City ba...
VOLUNTARY ONLY - EXPENSES REIMBURSED : Reach Volunteering: Fantastic opportuni...