Greek woes return to weigh on bourses
In London, the benchmark FTSE 100 index ended a volatile session just over 1 per cent lower at 5,075.5 after the Greek government admitted it would fail to meet this year’s debt reduction targets.
A 2012 draft budget approved by Greece’s cabinet on Sunday predicted a deficit of 8.5 per cent of gross domestic product for 2011, missing its 7.6 per cent target, even with more austerity measures.
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Hide AdHighlighting the impact the debt crisis is having on the banking sector, ratings agency Moody’s then said it was reviewing the rating of Franco-Belgian bank Dexia on concerns about its liquidity position.
Colin Cieszynski, market analyst at CMC Markets, said a managed bankruptcy for Greece and a major bondholder “haircut” in the 50 per cent range appeared increasingly likely.
“Twitchy equity investors, keen not to get caught out on the wrong side of a sell-off, trimmed positions in banking shares as concerns grew that the eurozone debt problems could lead to a fresh banking crisis,” he said.
Increasing concerns about the effect of the crisis on global economic growth meant markets across Europe and Asia were down on the day, while leading US indices fell in early trading.