Wednesday 29 March 2017

Greece crisis: European shares and bank stocks fall as debt talks fail again

Alex Tsipras
Alex Tsipras

European stocks fell on Monday, impacted by a lack of concrete progress on Greece's debt problems, with major banking shares among the worst performers.

The pan-European FTSEurofirst 300 index fell 1 percent to 1,529.27 points in early session trading.

Germany's DAX retreated 1.5 percent to 11,033.92 points, leaving the DAX some 11 percent below a record high set in April, while France's CAC declined by 1.1 percent.

Italy's FTSE MIB equity index also fell 1.3 percent, with banking group Intesa Sanpaolo dropping 2 percent as worries over Greece's debt situation pushed down Italian bond futures.

Greek shares also tumbled.

Athens' benchmark ATG equity index fell 6.2 percent, underperforming a 0.8 percent decline on the broader, pan-European FTSEurofirst 300 index. The ATG is down by around 13 percent since the start of 2015, compared to a 12 percent gain on the FTSEurofirst.

Talks on ending a deadlock between Greece and its international creditors broke up in failure on Sunday, with European leaders venting their frustration as Athens stumbled closer towards a debt default that threatens its future in the euro.

"There's been no progress on Greece, so I expect European stock markets will undergo further selling pressure in the near-term," said Berkeley Futures' associate director Richard Griffiths.

Earlier, the euro skidded in Asian trade on Monday after Greece's talks with lenders to avert a default ended with no agreement and Wall Street marked losses ahead of a Federal Reserve meeting.

A selloff in Chinese shares further darkened the mood, as investors reacted to recent news of a fresh tightening in margin financing as well as a tidal wave of initial public offerings.

Financial spreadbetters expected Britain's FTSE 100 .FTSE to open down by 42-43 points, or 0.6 percent lower. Germany's DAX .GDAXI was seen opening down by 72-76 points, or 0.7 percent lower, while France's CAC 40 .FCHI was also expected to open down by 32-33 points, or 0.7 percent lower.

European Union officials blamed the collapse of Greece's latest debt talks squarely on Athens, which it said had failed to offer any new concessions to secure funding it needs to repay 1.6 billion euros ($1.79 billion) to the International Monetary Fund by the end of this month.

"Given that Germany won't countenance anything like debt relief at this point, we are likely set to see a continuation of this game of political 'cat and mouse' through this week's Eurogroup finance ministers meeting on Thursday, and beyond to the end of the month," Michael Hewson, chief market analyst at CMC Markets UK said in a note to clients.

"It does rather beg the question as to why we can't all end this charade which suggests a deal is even possible, and fast forward to the bit at the end of the month where the default happens and we can move on to the next stage of the process," Hewson said.

The euro slipped about 0.6 percent on the day to $1.1197 EUR=, and was down 0.5 percent against the yen at 138.27 EURJPY=.

"With no deal in sight, expectations for default and exit are likely to rise sharply in the days ahead," said Elsa Lignos senior currency strategist at RBC.

 

Reuters

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