Markets uneasy as Greeks empty €800m in savings from banks

 

The shockwaves from Greece's failure to form a coalition government have continued to reverberate around markets, though upbeat US economic indicators gave the more positive-minded investor something to latch on to.

Greece is headed for another general election next month after nine days of unsuccessful talks since the May 6 poll yielded a split vote with no one party able to govern on its own.

The next election on June 17 could well become a referendum over Greece's place in the euro - which could mean the established Greek political parties that took a hammering in the first poll might do better. However, markets are still worried that Syriza, the radical left coalition that came a surprise second in the first election, may actually emerge as the biggest party next time round. Led by Alexis Tsipras, Syriza has steadfastly stuck to its anti-austerity, anti-bailout position.

"The fear is that the anti-austerity vote will grow," said Fawad Razaqzada, market strategist at GFT Markets. "The big issue is how this squares with the Greeks' desire to keep the euro as their currency."

Without agreeing to another round of austerity measures, it is conceivable that Greece's partners in the eurozone will withhold the next round of bailout cash that is keeping it afloat. An exit from the euro could then become inevitable.

In Greece, that prospect has led to further outflows of Greek deposits, with some 800 million euro (£640 million) thought to have made their way out of Greek banks since the election. Those deposits may have found their way into safe-haven alternatives, such as German and British 10-year bonds, which have risen to record highs in the secondary markets. The US dollar has also mustered a lot of support through its perceived status as a safe haven asset, especially against the euro, which has sunk to near four-month lows of around 1.27.

European stocks, having opened sharply lower, steadied having taken a battering over the past week or so amid the political gridlock in Greece. Figures showing a 1.1% monthly rise in US industrial production and a further stabilisation in the housing market helped to shore up markets as Wall Street opened.

"Financial markets remain focused on Europe but at least the US data are not adding to the worry," said Jennifer Lee, an analyst at BMO Capital Markets.

In Europe, the FTSE 100 Index of leading British shares was up 0.1% at 5,441 while Germany's DAX rose 0.4% to 6,425. The CAC-40 in France outperformed its peers, trading 1.2% higher at 3,076.

In the US, the Dow Jones Industrial Average was 0.6% higher at 12,706 while the broader S&P 500 index rose 0.7% to 1,340.

Though the US data provided some relief, the focus of attention over the coming month until the Greek election will probably centre on Europe's debt crisis. The great fear is that other indebted countries, such as Spain and Italy, will suffer the fallout from contagion fears.

"Right now there is a serious risk that (investors) will not lend us money or they will do so at an astronomical rate," Spanish prime minister Mariano Rajoy told politicians.

Mr Rajoy was speaking as the country's bonds came under renewed pressure. The stabilisation in markets later eased that pressure. Nevertheless, the yield on Spain's 10-year bond stands at 6.27%. Though below the level hit last November, the rate is uncomfortably near the 7% level, widely considered to be unsustainable in the long run.

Earlier, Asian benchmarks recorded sharp losses earlier in the day.

Japan's Nikkei 225 index dropped 1.1% to close at 8,801.17, its lowest close since January 30, amid discouraging economic news. Core private sector machinery orders fell 2.8% in March, the first drop in three months, Japan's cabinet office said.

Hong Kong's Hang Seng plummeted 3.2% to 19,259.83 and South Korea's Kospi fell 3.1% to 1,840.53.

Mainland Chinese shares also lost ground, with the benchmark Shanghai Composite Index falling 1.2% to 2,346.19. The Shenzhen Composite Index dropped 1.4 % to 942.04.

AP

Suggested Topics
News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
News
people Emma Watson addresses celebrity nude photo leak
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
footballFeaturing Bart Simpson
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
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 General

SEN Teachers and Support Staff

£50 - £130 per day: Randstad Education Chelmsford: Are you an SEN Teacher or L...

SharePoint Engineer - Bishop's Stortford

£30000 - £35000 per annum + benefits: Ashdown Group: A highly successful organ...

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

SEN Teaching Assistant

£50 - £70 per day: Randstad Education Chelmsford: Are you a Teaching Assistant...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering