Greek Tragedy: Stock markets lower ahead of Papandreou confidence vote
EUROPEAN stock markets closed lower today as traders nervously awaited the outcome of a confidence vote for the under-pressure Prime Minister George Papandreou and the Greek Government.
The FTSE 100 Index lost earlier gains to fall 18.5 points to 5,527.2 while Germany’s DAX finished down 2.75pc and France’s CAC at 2.25pc as the political drama in Greece threatens to derail Europe's efforts to stem the debt crisis.
US markets were also downbeat after G20 leaders failed to offer any solid progress towards boosting global economic prospects following their two-day meeting in Cannes.
Traders had breathed a sigh of relief earlier in the session after Greek Prime Minister George Papandreou U-turned on plans to hold a referendum on the critical eurozone rescue deal.
But the eurozone rescue package could again be in jeopardy if he loses a confidence vote tonight and a new Government refuses to accept the plans.
Investors are worried that if Greece defaults it could cripple European banks and cause fiscal strain on much larger European countries like Italy, which are too big to bail out.
Elsewhere, soaring Italian borrowing costs continued to underline the broader problems faced by the eurozone, as did official figures revealing a 4.3pc decline in German factory orders.