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Greek stocks fall 6% on debt fear | Greek stocks fall 6% on debt fear |
(41 minutes later) | |
Falling confidence in Greece's economic policies and ability to pay its debts have seen Greek shares slump 6%. | Falling confidence in Greece's economic policies and ability to pay its debts have seen Greek shares slump 6%. |
The decline came after the Fitch credit rating agency cut Greece's rating to a 10-year low. Greek bond prices also fell as a result. | The decline came after the Fitch credit rating agency cut Greece's rating to a 10-year low. Greek bond prices also fell as a result. |
Fitch's move underscores the fact that Greece's debt is the most expensive to service in the eurozone. | Fitch's move underscores the fact that Greece's debt is the most expensive to service in the eurozone. |
Greece has the highest debt of the 16-member bloc - forecast at 125% of gross domestic product next year. | Greece has the highest debt of the 16-member bloc - forecast at 125% of gross domestic product next year. |
Fitch's downgrade follows recent warnings by two other agencies that they were considering such a move. | Fitch's downgrade follows recent warnings by two other agencies that they were considering such a move. |
'Very difficult' | |
Separately, on Monday the president of the European Central Bank (ECB) said Greece needed to take "courageous" measures. | Separately, on Monday the president of the European Central Bank (ECB) said Greece needed to take "courageous" measures. |
"The situation in Greece is very difficult," ECB chief Jean-Claude Trichet told the European Parliament's economic committee. | "The situation in Greece is very difficult," ECB chief Jean-Claude Trichet told the European Parliament's economic committee. |
"So this calls for very difficult, very courageous but absolutely necessary measures." | "So this calls for very difficult, very courageous but absolutely necessary measures." |
Greece's new government has acknowledged growing fears about its ability to pay its debts, fuelled by Dubai's financial problems. | Greece's new government has acknowledged growing fears about its ability to pay its debts, fuelled by Dubai's financial problems. |
Greece finds itself in an asphyxiating stranglehold to prod the government to undertake structural reforms Manos Hatzidakis, Pigasos | Greece finds itself in an asphyxiating stranglehold to prod the government to undertake structural reforms Manos Hatzidakis, Pigasos |
Finance Minister George Papaconstantinou has said the government is working to correct a "lack of credibility" in the financial markets. | Finance Minister George Papaconstantinou has said the government is working to correct a "lack of credibility" in the financial markets. |
Some analysts say Greece could at some point be unable to use its own government debt as collateral for borrowing from the ECB. | Some analysts say Greece could at some point be unable to use its own government debt as collateral for borrowing from the ECB. |
"Greece finds itself in an asphyxiating stranglehold to prod the government to undertake structural reforms and measures to combat tax evasion," said Manos Hatzidakis, an analyst with brokerage firm Pigasos. | "Greece finds itself in an asphyxiating stranglehold to prod the government to undertake structural reforms and measures to combat tax evasion," said Manos Hatzidakis, an analyst with brokerage firm Pigasos. |
The financial blow came as the government struggled to settle two days of youth riots. | The financial blow came as the government struggled to settle two days of youth riots. |
They mark the anniversary of the police shooting of a 15-year-old boy last year. That triggered widespread violence also fuelled by anger over the economy. | They mark the anniversary of the police shooting of a 15-year-old boy last year. That triggered widespread violence also fuelled by anger over the economy. |
Governments and companies issue bonds to raise money on the financial markets. | Governments and companies issue bonds to raise money on the financial markets. |
Markets are worried about the vulnerability of government bonds following comments from Dubai's government minister that it would not guarantee troubled property firm Dubai World's debt. | Markets are worried about the vulnerability of government bonds following comments from Dubai's government minister that it would not guarantee troubled property firm Dubai World's debt. |
Other countries seen as weak include the Republic of Ireland, Spain and Portugal. | Other countries seen as weak include the Republic of Ireland, Spain and Portugal. |