EUROZONE CRISIS WIPES £26BN OFF LONDON SHARES
France’s new President, Francois Hollande
Wednesday May 9,2012
By Mark Reynolds
NERVOUS traders wiped £26billion from the value of London’s leading shares index yesterday as eurozone fears returned to haunt world markets.
The latest sell-off, which followed a similar rout on Friday, left the FTSE 100 Index down 100 or 1.8 per cent to 5554, its lowest close this year.
The turmoil was triggered after the leader of Greece’s left-wing Syriza bloc said he would try to forge a coalition government that would tear up the austerity deal that underpins the country’s £190billion bail-out.
Alexis Tsipras’s radical plans would see Greece default on its debts and be ejected from the single currency.
However, it is far from certain that he will win enough support to form a government, so another election next month is a strong possibility – casting more doubt on the Greece’s future.
There were similar falls on other markets, with Germany’s Dax down nearly two per cent, France’s Cac-40 nearly three per cent lower and the Dow Jones Industrial Average in the us more than one per cent lower as London closed. The Greek stock market closed at its lowest level since 1992.
Athens is also in a bitter struggle to find a coalition government
Simon Furlong, a trader at financial spread betting company spreadex
Eurozone worries saw the pound now buying 1.24 euros – a three-and-a-half-year high against the single currency.
This is good news for holidaymakers travelling to the continent but a blow to exporters.
Adding to the nerves, France’s new socialist president Francois Hollande has said he will look for alternatives to austerity, sparking fears of a rift with German chancellor Angela Merkel.
The political uncertainty adds to fears over the strength of the recovery in the eurozone, with Italy, Spain and Greece back in recession and fears mounting that the us economy is slowing.
Simon Furlong, a trader at financial spread betting company spreadex, said: “Investors are nervously waiting to find out what direction France’s new president will take with regards to Germany. Athens is also in a bitter struggle to find a coalition government.”