Business Irish

Friday 28 October 2016

Greece drags European stocks lower

Colm Kelpie and Bloomberg

Published 16/06/2015 | 02:30

Traders work on the floor of the New York Stock Exchange shortly after the opening bell. Photo: Reuters
Traders work on the floor of the New York Stock Exchange shortly after the opening bell. Photo: Reuters

Greece dragged European stocks to their lowest level in almost four months after weekend debt talks between the Mediterranean nation and its creditors broke down.

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By the close in Dublin, the ISEQ Overall Index was down 0.67pc or 41.83 points to end the trading session at 6,168.25.

The leaders on the Dublin market included food ingredients company Kerry, which rose 1pc to €67.75, while fruit company Fyffes was up 0.4pc to €1.18.

On the other side of the board, the laggards included packaging giant Smurfit Kappa, which fell 1.9pc to €26, while Aer Lingus was down 1.7pc to €2.37.

Elsewhere, the Stoxx Europe 600 Index slipped 1.6pc to 383.02 at the close of trading.

Greece's ASE Index dropped 4.7pc, with Alpha Bank and Piraeus Bank tumbling at least 9pc.

Italy's FTSE MIB Index posted the second-worst performance among western-European markets, with a 2.4pc decline.

"It's all about politics," said Witold Bahrke, an asset-allocation strategist at Nomura International in London.

"Either things will go down relatively smoothly, or you have the extreme scenario where they leave the euro and we're in uncharted territory. We can manage a Grexit, but after initial market volatility, it should lead to higher risk premia."

Talks in Brussels between Greece and its creditors fell apart after just 45 minutes on Sunday. The European Commission said that the divide between what creditors demanded and what Greece was prepared to do couldn't be bridged. Thursday's meeting of Eurozone finance ministers may now be a make-or-break session deciding whether it can avert default.

"It doesn't need to happen this week, the deadlines are very fluid," said Mr Bahrke. "But if we're in July and we don't have a deal, I would expect some nasty volatility around European assets.

Irish Independent

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