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European banking stocks fall despite Greek vote result | European banking stocks fall despite Greek vote result |
(about 1 hour later) | |
European banking stocks have fallen sharply despite the victory of pro-bailout parties in Greece's elections on Sunday. | European banking stocks have fallen sharply despite the victory of pro-bailout parties in Greece's elections on Sunday. |
While the New Democracy party's win raised hopes that the country would stick to austerity measures and stay in the euro, analysts said that much uncertainty remained. | While the New Democracy party's win raised hopes that the country would stick to austerity measures and stay in the euro, analysts said that much uncertainty remained. |
The fall in bank shares was seen across Europe, with Germany's Commerzbank down 4.3% and France's BNP losing 3.6%. | |
Wider share indexes were mixed. | Wider share indexes were mixed. |
France's Cac was down 0.8% in afternoon trading, while Germany's Dax was 0.2% higher. Both had earlier risen 1%. The UK's FTSE was up 0.2% after falling in early trading, while in New York the Dow Jones was down 0.3% in opening exchanges. | |
Among other banking shares, Deutsche Bank was down 1%, while Credit Agricole had lost 3.8%. In the UK, Royal Bank of Scotland had given up 5%. | |
The yield on Spanish bonds - the eurozone country said to be most at risk of needing an international bailout in the future - also remained volatile. The yield on Spain's 10-year bonds had initially fallen as low as 6.767%, before then rising to 7.08%. | The yield on Spanish bonds - the eurozone country said to be most at risk of needing an international bailout in the future - also remained volatile. The yield on Spain's 10-year bonds had initially fallen as low as 6.767%, before then rising to 7.08%. |
Italy's 10-year bond yield also rose, hitting 6.08%, after earlier falling to 5.847%. | Italy's 10-year bond yield also rose, hitting 6.08%, after earlier falling to 5.847%. |
Yield rises | Yield rises |
The main share indexes of Spain and Italy also fell. | The main share indexes of Spain and Italy also fell. |
Spain's Ibex was down 1.8%, while Italy's FTSE MIB lost 1.2%. | Spain's Ibex was down 1.8%, while Italy's FTSE MIB lost 1.2%. |
In the currency markets, the euro was slightly lower against the dollar, at $1.2628 from $1.2637 late on Friday. | In the currency markets, the euro was slightly lower against the dollar, at $1.2628 from $1.2637 late on Friday. |
Asian shares had earlier on Monday posted strong gains, with Japan's Nikkei 225 index and South Korea's Kospi both closing up 1.8%, while Australia's ASX 200 added 1.9%. | Asian shares had earlier on Monday posted strong gains, with Japan's Nikkei 225 index and South Korea's Kospi both closing up 1.8%, while Australia's ASX 200 added 1.9%. |
Antonis Samaras, the leader of the New Democracy party, said on Sunday that "the Greek people voted today to stay on the European course and remain in the eurozone". | Antonis Samaras, the leader of the New Democracy party, said on Sunday that "the Greek people voted today to stay on the European course and remain in the eurozone". |
"There will be no more adventures. Greece's place in Europe will not be put in doubt." | "There will be no more adventures. Greece's place in Europe will not be put in doubt." |
'Too euphoric' | 'Too euphoric' |
Adrian Slack, head of equities at Bastion Capital, said the initial reaction to the Greek election result was "too euphoric". | Adrian Slack, head of equities at Bastion Capital, said the initial reaction to the Greek election result was "too euphoric". |
He added: "Fundamentally, the problems [in Greece and the eurozone] haven't changed." | He added: "Fundamentally, the problems [in Greece and the eurozone] haven't changed." |
Peter Schiff, of the brokerage Euro Pacific Capital, added: "How long is it going to take for people to worry about Spain again?" | Peter Schiff, of the brokerage Euro Pacific Capital, added: "How long is it going to take for people to worry about Spain again?" |
Spain's borrowing costs have been hitting euro-era record levels, indicating that lenders were concerned about Madrid's ability to repay its debts. | Spain's borrowing costs have been hitting euro-era record levels, indicating that lenders were concerned about Madrid's ability to repay its debts. |
Last week, the ratings agency Moody's cut Spain's credit rating to one notch above "junk". | Last week, the ratings agency Moody's cut Spain's credit rating to one notch above "junk". |
Yet other analsyts were more optimistic. | Yet other analsyts were more optimistic. |
Masayuki Doshida, a senior market analyst at Rakuten Securities, said the victory of Greece's New Democracy party had allayed eurozone fears for now. | Masayuki Doshida, a senior market analyst at Rakuten Securities, said the victory of Greece's New Democracy party had allayed eurozone fears for now. |
"There'll be a definite sense of relief spreading around today," said Masayuki Doshida, she said. | "There'll be a definite sense of relief spreading around today," said Masayuki Doshida, she said. |
Fellow analyst, David Lennox of Fat Prophets, told the BBC that the worst of the Greek crisis could now be over. | Fellow analyst, David Lennox of Fat Prophets, told the BBC that the worst of the Greek crisis could now be over. |
"We think that early punters are already taking the view that a floor has been put under the crisis for now," he said. | "We think that early punters are already taking the view that a floor has been put under the crisis for now," he said. |
Contagion concerns | Contagion concerns |
The elections in Greece were being watched closely, not just by eurozone leaders but also investors all across the globe. | The elections in Greece were being watched closely, not just by eurozone leaders but also investors all across the globe. |
Greece, which is suffering from a sovereign debt crisis, has received two bailouts in the past two years. | Greece, which is suffering from a sovereign debt crisis, has received two bailouts in the past two years. |
It was given an initial package worth 110bn euros (£89bn; $138bn) in 2010, followed by another one agreed last year worth 130bn euros. | It was given an initial package worth 110bn euros (£89bn; $138bn) in 2010, followed by another one agreed last year worth 130bn euros. |
However, the EU and IMF have attached tough austerity measures, including state spending cuts, as pre-conditions to those packages. | However, the EU and IMF have attached tough austerity measures, including state spending cuts, as pre-conditions to those packages. |
There have been various demonstrations against these cuts in Greece and the Syriza party had said that it would renegotiate the conditions if it came to power. | There have been various demonstrations against these cuts in Greece and the Syriza party had said that it would renegotiate the conditions if it came to power. |
It had led to fears that if eurozone leaders and Athens did not agree on the existing terms, Greece may be forced to leave the eurozone. | It had led to fears that if eurozone leaders and Athens did not agree on the existing terms, Greece may be forced to leave the eurozone. |
There were concerns that such a move may spread contagion to other eurozone countries and result in turmoil in the global economy. | There were concerns that such a move may spread contagion to other eurozone countries and result in turmoil in the global economy. |
However, the BBC's business editor, Robert Peston, said the new Greek government still faced an uphill challenge. | However, the BBC's business editor, Robert Peston, said the new Greek government still faced an uphill challenge. |
He said that bankers had told him Greece needed "eurozone governments and the European Central Bank to write off a big slug of what they are owed". | He said that bankers had told him Greece needed "eurozone governments and the European Central Bank to write off a big slug of what they are owed". |