Wednesday, May 9, 2012

Greek bailout uncertainty sends Asia markets, euro into tailspin

Asian markets and the euro fell on May 9 on fears Greece could leave the eurozone.

Source: Press TV

Asian markets and the euro have taken a tumble over a plan in Greece to form an anti-austerity government, which raises the risk of the country’s departure from the eurozone.

The Wednesday’s fall comes after European people voted against pro-austerity leaders in elections in countries including Greece, France, Germany and Italy.

Following the uncertainty in Europe, Tokyo shares fell 1.19 percent. Hong Kong dropped 0.73 percent, Shanghai shed 0.87 percent and Seoul fell 0.64 percent.

The leader of Greece's left-wing Syriza party, Alexis Tsipras, said Tuesday that his cabinet would rule out all budget-cutting austerity measures, which were imposed under an EU-IMF bailout deal.

"The public verdict has clearly nullified the loan agreement and (pledges) sent to Europe and the (International Monetary Fund)," he said, while considering the bailout terms as "barbaric.”

His remarks raised the prospects that Athens would be denied any fresh cash for paying its debts, which could lead the country to default.

Tsipras received a mandate to form a new government after the country’s two ruling parties advocating austerity measures suffered major losses in Sunday elections.

"The failure of the Greek election to produce a new government provides some support to our view that Greece could leave the eurozone as soon as the end of this year," London-based Capital Economics’ note read.

The concerns also affected the euro, which fell 0.3 percent to $1.2971.

"The situation in Greece remains worrisome, especially with respect to the euro," Toshiyuki Kanayama, market analyst at Monex brokerage, said.

The turmoil in the euro region has urged EU Commission to call on the bloc members to stick to their budget cuts, while promising to draw up plans to introduce more growth measures to alleviate economic hardship.

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