A trader stands underneath a TV screen showing Greek Prime Minister Alexis Tsipras (left) at the Madrid Stock Exchange. The Madrid index fell 0.78% in yesterday’s trading.
AFP/London
Europe’s main stock markets ended the day firmly lower yesterday as hopes faded of a last-minute deal to stave off Greece defaulting on its payment to the International Monetary Fund.
The CAC 40 in Paris ended down 1.63% to 4,790.20 points and Frankfurt’s DAX 30 lost 1.25% to 10,944.97 points.
Rome shed 0.48% and Madrid fell 0.78%.
Outside the eurozone, London’s benchmark FTSE 100 index of top companies fell 1.50% to 6,520.98 points.
Investors there also reacted to news that although Britain’s economy grew faster-than-expected in the first quarter, the pace slowed from the end of 2014.
Eurozone stocks had been trying to stage a bit of a rebound of losses of more than 3.5% on Monday, fuelled by reports that Greece was trying to negotiate a last-minute deal that would keep if from defaulting.
However, with just moments to go before trading stopped, German Chancellor Angela Merkel said there would be no deal before Greece votes on Sunday in a bailout referendum called by its government, which sent stocks tumbling.
Greece has already said it won’t pay Tuesday the €1.5bn ($1.7bn) it owes to the International Monetary Fund, which will make it the first country to default to the IMF since Zimbabwe in 2001.
“The markets reacted primarily to different information on Greece, but at this point there is nothing tangible, nothing reassuring, in one sense or the other,” said Mikael Jacoby, head of continental European trading at Oddo Securities in Paris.
Trading in Athens was closed yesterday as part of measures that the government and central bank announced to protect the financial system, including closing the banks for the week and limiting bank machine withdrawals.
In foreign exchange activity yesterday, the euro dropped to $1.1147 from $1.1247 late in New York on Monday.
Lee Hardman, a London-based currency analyst at Bank of Tokyo-Mitsubishi, pointed out that “the negative developments regarding Greece are increasing downside risks for the euro.”
“At this stage although the risks of ‘Grexit’ have increased, the market is still comfortable that the more likely scenario remains that Greece will remain within the eurozone which is limiting euro weakness in the near-term.”
A one point on Monday, the single currency tumbled below $1.10 before pulling back late in the day.
Wall Street was staging a bit of rebound yesterday, with the Dow Jones Industrial Average up 0.20% to 17,630.75 points in midday trading in New York.
The broad-based S&P 500 added 0.26% to 2,063.08 points, while the tech-rich Nasdaq Composite Index climbed 0.45% to 4,981.02.
