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Greece debt crisis sends financial markets falling | Greece debt crisis sends financial markets falling |
(about 2 hours later) | |
Financial markets have fallen further as investors sold shares on fears about the impact of Greece's economic crisis. | Financial markets have fallen further as investors sold shares on fears about the impact of Greece's economic crisis. |
Every European market opened lower, with London, Paris and Frankfurt initially down more than 1%. | Every European market opened lower, with London, Paris and Frankfurt initially down more than 1%. |
The sell-off followed falls in Asian markets, with investors worried that the Greek economy has reached a tipping point and that contagion will spread. | The sell-off followed falls in Asian markets, with investors worried that the Greek economy has reached a tipping point and that contagion will spread. |
Greece's prime minister will try on Thursday to form a new cabinet and push through a debt restructuring plan. | Greece's prime minister will try on Thursday to form a new cabinet and push through a debt restructuring plan. |
In midday trading, London's FTSE 100 index was down 1.22% at 5,795.6 points. In Germany, the Dax 30 shed almost 1%, and in France, the Cac 40 was down more than 1% down. | |
The euro hit a three-week low at $1.4090. | |
"The clock is counting down. The financial markets are worried about a disorderly Greek debt default," said VTB Capital economist Neil MacKinnon. | |
"The risk of a 'Lehman Moment' for the eurozone is increasing," he added, referring to the collapse of the Wall Street bank in 2008, which caused panic and a global credit crunch. | |
To avoid the government defaulting on its debts, George Papandreou must pass new spending cuts and sell-offs of state property to receive new bail-out funds from the European Union and International Monetary Fund. | To avoid the government defaulting on its debts, George Papandreou must pass new spending cuts and sell-offs of state property to receive new bail-out funds from the European Union and International Monetary Fund. |
But rioters have again taken to the streets, and on Thursday, George Floridis, Greece's former deputy finance minister, resigned in protest at the slow pace of economic reforms. | But rioters have again taken to the streets, and on Thursday, George Floridis, Greece's former deputy finance minister, resigned in protest at the slow pace of economic reforms. |
There have been reports that Mr Papandreou may seek to replace his finance minister, George Papaconstantinou, the main architect of hugely unpopular budget cuts. | There have been reports that Mr Papandreou may seek to replace his finance minister, George Papaconstantinou, the main architect of hugely unpopular budget cuts. |
Default fears | Default fears |
The crisis comes amid a backdrop of soaring unemployment, with new figures on Thursday showing that the jobless rate rose to 15.9% in the last three months, up from 14.2% for the same quarter last year. | The crisis comes amid a backdrop of soaring unemployment, with new figures on Thursday showing that the jobless rate rose to 15.9% in the last three months, up from 14.2% for the same quarter last year. |
French and European Central Bank officials have warned that a restructuring of Greece's 350bn-euro debt as proposed by Germany could cause a default that would shake the whole eurozone. | French and European Central Bank officials have warned that a restructuring of Greece's 350bn-euro debt as proposed by Germany could cause a default that would shake the whole eurozone. |
French President Nicolas Sarkozy on Thursday urged other European leaders to find a compromise on Greece's debt crisis to stabilize the euro. | French President Nicolas Sarkozy on Thursday urged other European leaders to find a compromise on Greece's debt crisis to stabilize the euro. |
Without stability, there would be no economic growth in the eurozone, he said. | Without stability, there would be no economic growth in the eurozone, he said. |
France's three biggest banks are at risk of a credit downgrade because of exposure to Greek debt. | France's three biggest banks are at risk of a credit downgrade because of exposure to Greek debt. |
Shares in Credit Agricole, Societe Generale and BNP Paribas lost more than 4% after Moody's said it may downgrade them due to their exposure to Greece. | |
Shares in Franco-Belgian lender Dexia fell as much as 10%. Shares of Portugal's BCP have lost 8% in the last two days. |