European Stocks Slip on Greek Political Turmoil

Greece electionBy COLLEEN BARRY, AP Business Writer

MILAN -- European and U.S. markets sank Tuesday as investors worried whether Greece, after an inconclusive election, would be able to form a new government to save it from financial disaster.

After Greek conservatives failed to create a government, the baton passed to the Radical Left Coalition leader Alexis Tsipras. He is not expected to be able to form a governing coalition either, which makes another general election increasingly likely.

Greek shares have borne the brunt of the concerns. After sliding nearly 7% on Monday, Athens' main stock exchange was down a further 5.2% near the end of trading Tuesday.

"Greece's troubles will worsen if the job of forming a new government drags out and forces another round of elections," said Craig Erlam, an analyst at Alpari. Erlam warned that Greece could run out of money in June without a government to negotiate the next tranche of its financial bailout.

And if Greece can't stay solvent, it risks falling out of the eurozone, with potential knock-on effects throughout the global economy.

Against that backdrop, European shares failed to sustain a recovery from the previous day. Britain's FTSE 100 fell 0.3% to 5,640. Germany's DAX slipped 0.7% to 6,524 and France's CAC-40 dropped 1.6% to 3,163.

The Dow Jones industrial average was down 65 points at 12,944 shortly after trading began. The S&P 500 was down 7 at 1,362.

Markets were thrown into a tailspin Monday after weekend elections in France and Greece led to a sharp shift in the political landscape with the focus shifting away from austerity. In France, President Nicolas Sarkozy was thrown out of office by voters opposed to his belt-tightening program and replaced by Socialist Francois Hollande, who wants growth to become a more central plank of Europe's debt crisis resolution.

"Although the French election result has now been deemed to not be a threat, Greece remains a significant concern and is likely to be a source of volatility through the week," said Stan Shamu of IG Markets in Melbourne.

In Greece, voters punished the two parties that have overseen the country's harsh austerity measures and left no party with enough votes to form a government.

Earlier, Asian shares posted modest gains. Japan's Nikkei 225 index edged up 0.7% to close at 9,181.65, a day after closing at its lowest level in three months.

In other Asian markets, South Korea's Kospi added 0.5% to 1,967.01. Australia's S&P/ASX 200 rose 0.3% to 4,314.30.

Benchmark oil for June delivery was down 88 cents to $97.06 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 55 cents to settle at $97.94 in New York on Monday.

In currencies, the euro fell to $1.3001 from $1.3050 late Monday in New York. The dollar fell to 79.82 yen from 79.94 yen.


Pamela Sampson in Bangkok contributed to the article.

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16 Comments

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GymmyKramir

Boogawagarama
It’s Gymmy Kramir with a LIVE from Hawaii.
U guessed it. I know when to get the hell out uv NYC after taking that strange Mark last week from the lumber Daarck Knight layed in2 me. I won’t be able 2 sit 4 weeks.
It looks like NYC chicken little is up this morning. Watch their investments MUSHROOM. NYC has more enemies around the werld than George W and the Red Plague.
Boogawagarama.
U show the werld now NYC PIGGS whose BOSS. No one selling and in fact investors buying so the market must go waaaaaaaaaay waaaaaaay down now. U show em NYC PIGGS how to short America’s investments with counterfeit securities and derivatives with La Cosa Nostra a.ka. Hedge Funds and the SEC . U show the Euro and European economy how far u can take them down and they R in a Foul mood.
Boogawagarama
Yep. I am outta here and ready 2 RIDE again. Calling Daarck Knight, calling Daarck Knight and I’ll bring the anell mustard this time and some Hawaii SPAM 2.
Boogawagarama everyone and a repeat below of last weekends events.

This is the 13th Edition of the Wall Alley PIGG a publication 4 professionalz that want 2 RIDE and RIDE Satans anal trident 2 Success!!
Title: Mondaze 5/7/2012 News 2 Day
It’s me Baby,
I am back.
Gymmy Kramir,
Back from a wild weekend.
Daarck Knight slapped me all over the weekend with his lumber.
U can tell by how stiff my mustache iz.
Yep. U guessed it.
Anell Mustard.
Boogawagarama
Well 2daZE newZ iz.
We will drop
600 to 6000 points.
Boogawagarama
Why?
B cause
D
Lution.
Just take a look at these certificates, Baby.
Right out uv the Treasury.
Look real, don’t they.
But they aren’t. u BETCHA.
Boogawagarama on U.
We’ll that’s it 4 2 day.
Regards,
Gymmy Kramir and remember;
Lube first b 4 U ride and I recommend
Anell Mustard.

May 09 2012 at 7:56 AM Report abuse rate up rate down Reply
mrandmrsz

BS to the headline. The Greeks are hopeless. But it was the French, now with a Socialist in charge, that sent stock down.

The fight between stimulus and austerity, though, is incomplete. The third path is the "Anglo-American" low tax and growth path that no one seems willing to put forward.

May 08 2012 at 10:47 PM Report abuse rate up rate down Reply
Setanta

INCOMING !!!!!!!!!!!!!!!!!!!!!!!!!!!!

from here and abroad and the MORONS will continue to INSIST that fWance IS going in the right direction on TOP OF THIS !

May 08 2012 at 6:41 PM Report abuse +1 rate up rate down Reply
jdykbpl45

Beware of Greeks and their gifts.

May 08 2012 at 6:18 PM Report abuse +2 rate up rate down Reply
krazzicraig

The problems in the financial world have their roots starting at Goldman/Sacks They were at the heart of every deal ,manipulation and fraud .It is public record they cooked the books of the Greek goverment .Why nonoe of these folks are not in jail is an outrage.

May 08 2012 at 4:02 PM Report abuse +3 rate up rate down Reply
dinohealth

hgeorgecb, the problem is not Greece. Even if you cut Greece loose, the EU will continue its downward march toward deeper recession, and depression. In a few months it will be Spain. Ireland, Italy, France, and, yes, even Germany (!) will soon be facing the results of the austerity measures and fiscal policies. Rumania, I believe, just stated it will request the renegotiation of its financial agreements. It should also be noted that it was US accounting firms that prepared most of the "books" for a lot of these countries before they entered the EU! You are seeing the tip of the iceburg....

May 08 2012 at 3:36 PM Report abuse +2 rate up rate down Reply
1 reply to dinohealth's comment
Setanta

you never heard of PIGS ? as in portugal,ireland,greece and spain ? ghermany has HAD ENOUGH and has the ba((s to TELL THEM AS WELL.--they're not bailing anyone out.

May 08 2012 at 6:43 PM Report abuse +1 rate up rate down Reply
1 reply to Setanta's comment
dinohealth

Germany has been profiteering from the situation, not bailing anyone out! When Germany (through the European Central bank) borrows at 1%, and turns around and lends to the Greeks at over 4%, while imposing harsh economic austerity measures as part of the deal that virtually guarantee deeper recession and shrinking revenue (ability to repay), that, is not "bailing" anyone out! If Germany wanted to help, they might have ambled up to the table and paid the reparations that are owed to Greece from WWII, when Germany destroyed Greece's infrastructure. Instead, as part of German "help", the loan package includes the mineral, water, and energy rights under the ground of Greek citizens' homes that hold a mortgage! German companies own most of Greece's telecommunications infrastructure, are buying up water companies, and are aggressively moving in buying Greek solar energy. Geopolitically, Greece's major future wealth does not rest on oil, minerals, and gas (though there are huge deposits of same under its territorial ground and waters); its greatest future wealth is found in its huge deposits of fresh water and solar energy (300+ days of sunshine a year)!

May 10 2012 at 5:40 PM Report abuse rate up rate down
jkennedy806

Until the EU leaders come clean and stop trying to hide the Goldman Sachs connection protection, it will be more of the same. Austerity is just another word for cover up. When golden dawn and Hollande expose the true culprits then the can that was kicked down the road will finally have a resting place.

May 08 2012 at 3:32 PM Report abuse +2 rate up rate down Reply
1 reply to jkennedy806's comment
Setanta

LOL ! 'ollande ???? expose what ? where's their money gonna come from ? does 'ollandE have a stash like oboMBa has ???? LM@O.

May 08 2012 at 6:44 PM Report abuse +1 rate up rate down Reply
hgeorgech

Come on ... enough is enough!

Cut Greece loose from the EU ... be honest, it never should have been allowed in, but WAS due to "creative accounting" ... until Greece accepts reality of their woefully inadequate economic situation and realizes 60+% of its population can not remain on the dole forever, it (Greece) will continue to be a financial deadbeat on the EU and the Euro.

Kick em out ... Greece needs to devalue their OWN currency (bring back the drachma) and go it alone!

Keeping them afloat - for what seems like an eternity just won't work!

May 08 2012 at 3:15 PM Report abuse +1 rate up rate down Reply
mily469

banking reform first.

May 08 2012 at 3:14 PM Report abuse -2 rate up rate down Reply
dinohealth

The AP writer, above, reports that the formation of a government in Greece is highly unlikely, and that a second general election is highly likely. I would like to qualify that, and state that a second general election, in June, is a virtual certainty! The results of the Greek National Election (and the French), represent the outcome of a referendum on the harsh austerity measures that the EU presented as a "solution". In Greece, 70% of the voters said a resounding "No" to these measures. The referendum that George Papandreou had proposed six months ago, effectively costing him his Prime Ministership, is now history. The EU bought some time, to the tune of eighteen months, during Papandreou's tenure, to attempt to reel in the situation. Unfortunately, the EU's lethargic attempt to mobilize its resources, and the measures chosen were so simplistically harsh (reducing, across the board, already-barely-ubsistence-level retiree pensions, several retroactive, one-time-real estate taxes, and sharp reduction of public service and private sector salaries, for example), that resulted in the most untoward desire outcome: a sharp recession and unemployment (currently nearing 25%).

May 08 2012 at 2:38 PM Report abuse +1 rate up rate down Reply