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
Arts & Entertainment
A stranger calls: Martin Freeman in ‘Fargo’
tvReview: New 10-part series brims with characters and stories

News
peopleActress speaks out against historic sexual assault claims, saying things have 'gone quite far now'

Arts & Entertainment
Shaun Evans as Endeavour interviews a prisoner as he tries to get to the bottom of a police cover up
tvReview: Second series comes to close with startling tale of police corruption and child abuse
Sport
Raheem Sterling and Luis Suarez celebrate during Liverpool's game with Norwich
football Another hurdle is out of the way for Brendan Rodgers' side
VIDEO
Life & Style
Guests enjoy food and cocktail parings by Chefs Jimmy Bannos, Jimmy Bannos Jr, Daniel Rose and Mindy Segal with mixologists Josh King and Alex Gara at Bounty & Barrel: A Jack Daniel's Single Barrel Dinner Series at Heaven on Seven on April 9, 2014 in Chicago, Illinois.
news Sprinkle Palcohol 'on almost any dish' for 'an extra kick' firm says...
Arts & Entertainment
Charlotte Brontë, the English novelist, poet and the eldest of the three Bronte sisters who lived into adulthood, has been celebrated with a Google Doodle depicting her most famous novel, Jane Eyre.
arts + ents "Reader, they doodled her".

Arts & Entertainment
Schwarzenegger winning Mr. Universe 1969
arts + entsCan you guess the celebrity from these British Pathe News clips?
News
Portrait of Queen Elizabeth-II by David Bailey which has been released to mark her 88th birthday
peoplePortrait released to mark monarch's 88th birthday
Arts & Entertainment
The star of the sitcom ‘Miranda’ is hugely popular with mainstream audiences
TVMiranda Hart lined up for ‘Generation Game’ revival
Life & Style
The writer, Gerda Saunders, with her mother, who also suffered with dementia before her death
healthGerda Saunders on the most formidable effect of her dementia
Arts & Entertainment
Oxegen in Ireland has been axed as promoters decide it is 'no longer viable'
arts + ents Promoters have axed the event as it is 'no longer viable in current form'
News
The troubled star is set to give fans the biggest insight into her life away from the headlines
people Star made the announcement during the final episode of the programme, entitled Lindsay
News
YouTube clocks up more than a billion users a month
mediaEuropean rival Dailymotion certainly thinks so
Arts & Entertainment
The original design with Charles' face clearly visible, which is on display around the capital
arts + ents
Arts & Entertainment
‘Self-Portrait Worshipping Christ’ (c943-57) by St Dunstan
books How British artists perfected the art of the self-portrait
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Geography Teacher

£130 - £140 per day: Randstad Education Ilford: Secondary Geography Teacher Lo...

Do you want to work in Education?

£55 - £70 per day: Randstad Education Cheshire: Are you a dynamic and energeti...

SEN Teaching Assistant

Negotiable: Randstad Education Group: SEN TAs, LSAs and Support Workers needed...

Private Client Senior Manager - Sheffield

£50000 - £60000 per annum: Pro-Recruitment Group: The Sheffield office of this...

Day In a Page

Rubin ‘Hurricane’ Carter: The man who could have been champion of the world - and the Bob Dylan song that immortalised him

The man who could have been champion of the world

Rubin ‘Hurricane’ Carter and the Bob Dylan song that immortalised him
Didn’t she do well?

Didn’t she do well?

Miranda Hart lined up for ‘Generation Game’ revival
The Middle East we must confront in the future will be a Mafiastan ruled by money

The Middle East we must confront in the future will be a Mafiastan ruled by money

In Iraq, mafiosi already run almost the entire oil output of the south of the country
Before they were famous

Before they were famous

Can you guess the celebrity from these British Pathe News clips?
Martin Freeman’s casting in Fargo is genius

Martin Freeman’s casting in Fargo is a stroke of genius

Series is brimming with characters and stories all its own
How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players