Arab Today, arab today stocks take another dive on greek default fears
Last Updated : GMT 11:08:08
Arab Today, arab today
Arab Today, arab today

Stocks take another dive on Greek default fears

Arab Today, arab today

Arab Today, arab today Stocks take another dive on Greek default fears

London - Arabstoday

Stocks slid again Tuesday as Europe’s debt crisis showed few signs of being solved any time soon and officials said Greece will have to wait until November to get its hands on much-needed bailout cash. The hope in the markets was that debt inspectors would soon authorize the payment of the next tranche of cash for Greece, which has indicated it needed money by the middle of this month to pay salaries and pensions. However, eurozone finance ministers said Monday in a meeting in Luxembourg that Greece has enough to tide it over until early November. And with mounting talk that a second Greek bailout, first agreed in principle in July, may be revised to get Europe’s banks to take more of the bailout pain, uncertainty remains the hallmark in the markets. For investors, the lack of clarity and the potential for further delays and procrastination was frightening. After falling to a near 2011 low of $1.3162 on Monday, the euro was trading 0.2 per cent higher at $1.32. “The delays to the Greek loan disbursement are likely to unsettle financial markets and increase the probability of a disorderly Greek debt default,” said Neil MacKinnon, global macro strategist at VTB Capital. “The apparent lack of an urgent, cohesive ‘master plan’ to resolve the Eurozone debt and banking crisis can only increase market volatility and uncertainty.” In Europe, Germany’s DAX was down 3.1 per cent at 5,212 while the CAC-40 in France fell 2.3 percent to 2,858. The FTSE 100 index of leading British shares fell 2.2 percent to 4,964. Shares in Franco-Belgian bank Dexia bore the brunt of the selling in Europe as investors grew increasingly concerned about its survival in its current form despite government promises to prop up the bank and insure every cent of its deposits. With the markets bracing for a Greek debt default soon, investors are concerned about what bonds Europe’s banks are holding and banks themselves have become reluctant to lend to one another. In Brussels, Dexia’s share price was down over 22 percent, meaning it has lost more than half a billion euros of its market value. Dexia’s stock began its plummet Monday after Moody’s warned it could be downgraded, leading the board of directors to call an emergency meeting. “Dexia’s problems stress the point that for Eurozone leaders the Greek crisis is less about Greece and more about the potential for it to spark a much more widespread banking and economic disaster,” said Jane Foley, an analyst at Rabobank International. Wall Street was poised for a modest retreat at the open though the mood is jittery after Monday’s very weak finish — Dow futures were down 0.3 per cent at 10,497 while the broader Standard & Poor’s 500 futures fell 0.2 percent to 1,084. Aside from developments surrounding Greece, traders will look for clues as to the state of the world’s largest economy later Tuesday, when Federal Reserve chairman Ben Bernanke testifies before the Joint Economic Committee in Washington. Concerns over the state of the US economic recovery has also triggered the turmoil in financial markets in recent months, but recent economic data, including Monday’s manufacturing survey from the Institute for Supply Management has surprised to the upside. A raft of US economic data this week will culminates with Friday’s nonfarm payrolls report for September. The figures often set the tone in markets for a week or two and another weak number could reinforce concerns over the world’s largest economy. Earlier in Asia, Japan’s Nikkei 225 fell 1.1 percent to close at 8,456.12. South Korea’s Kospi plunged 3.6 percent to 1,706.19 after being closed Monday for a holiday, and Hong Kong’s Hang Seng sank 3.4 percent to 16,250.27. Markets in mainland China were closed for a holiday Meanwhile, the price of oil continued its descent. Benchmark crude for November delivery was down $1.09 to $76.52 per barrel in electronic trading on the New York Mercantile Exchange. ( from The Gulf Today )  

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