Greece debt crisis sparks more falls in stock markets
Published: 17th Jun 2011 10:33:09
European shares extended their losses on Friday as nervousness about the fate of Greece continued.
By mid-morning the main bourses in Britain, France and Germany were down about 1%, following losses in Asia.
Greece urgently needs another tranche of bail-out money to avoid defaulting on its debts, an event that could spread contagion throughout Europe.
A Spanish bond auction underlined the fears, with investors demanding a higher rate of return.
Earlier, Greece's Prime Minister George Papandreou replaced his finance chief as part of a cabinet reshuffle aimed at pushing through budget cuts.
Evangelos Venizelos takes over from George Papaconstantinou, a move that sparked a jump in Greek bank shares.
Mr Papandreou wants to impose political stability as Greece awaits approval for the next tranche of bail-out money to avoid defaulting on its debts.
The European Union's top financial official, Olli Rehn, has indicated that Greece is likely to get its next financial lifeline in July if Mr Papandreou's government can pass new budget cuts and privatisations before the end of the month.
Greece needs a 12bn euros loan to avoid defaulting on its debts, something that analysts and European politicians fear could spark a wider crisis within the eurozone.
Greece has seen street protests and political turmoil over the issue. Mr Papaconstantinou, the architect of Greece's austerity measures, had become increasingly unpopular in the country.
Although shares in Greek companies rose, with bank stocks up 4% at one stage, analysts were divided over whether the cabinet reshuffle would restore confidence.
Germany's Chancellor Angela Merkel and France's President Nicolas Sarkozy will discuss the Greek crisis at a meeting in Berlin later on Friday.
The two leaders are divided over the way forward, with Mrs Merkel pushing for private creditors and bondholders to share a big part of the burden.
France's big three banks are heavily exposed to the Greek economy.
On Friday, fears of contagion dominated the financial markets with European stock exchanges extending this week's falls. The main bourses down about 1% in morning trading.
This followed falls in Asia. Japan's Nikkei index has dropped 1.8% over the week, and is about 2.3% down in the past two days.
Hong Kong's main index is down 2.4% over the week and 2.1% lower in the past two days.
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Harvard CitationBBC News, 2011. Greece debt crisis sparks more falls in stock markets [Online] (Updated 17th Jun 2011)
Available at: http://www.ukwirednews.com/news/162955/Greece-debt-crisis-sparks-more-falls-in-stock-markets [Accessed 24th Apr 2014]
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