Reuters - Video

Edition: US | UK | IN | CN | JP

Video

Greek instability fuels euro exit fears

Sunday, May 13, 2012 - 02:20

May 14 - European shares fell to their lowest levels in over four months on worries about political instability in Greece, with Greek bank shares among the biggest fallers. A week after elections, Greece is without a new coalition government, leading to more discussion about the country leaving the euro. Joanna Partridge reports

▲ Hide Transcript

View Transcript

A week after Greece's inconclusive elections - and the country seems no closer to forming a new coalition government. The political uncertainty has worried investors - and Greek stocks fell once again on Monday. Banking shares were the hardest hit - initially falling by 7% before recovering slightly. The instability has also seen European stocks slide to 4-month lows, says Frankfurt trader Robert Halver. SOUNDBITE: Robert Halver, Baader Bank, saying (English): "It's all politics right now and the German equities are suffering, because we have no clear picture considering a Greek policy, a French policy, a European policy." The situation in Greece could be about to get much worse if the country has to hold fresh elections. There are warnings Athens could run out of money as early as the end of June, if there isn't a government in place to negotiate the next installment of aid from its international lenders. Polls show Alexis Tsipras, the leader of Greece's radical leftist party, would now come out on top of a new vote. He opposes the EU/IMF bailouts - but wants to stay in the euro zone. That's easier said than done, says Nick Beecroft from Saxo Bank. SOUNDBITE: Nick Beecroft, Senior Markets Consultant, Saxo Bank, saying (English): "There's a real danger in the next six months we see a number of misjudgements on the part of the Greek populous led, I would say, astray by Tsipras' suggestion that Greece can renege on the austerity programme and stay in the euro zone. And there may also be a miscalculation going on by let's say German politicians that Greece can exit without disastrous consequences." But the discussions about a Greek euro exit - or "Grexit" are getting louder. A return to the drachma would be disastrous, says Greek analyst George Tzogopoulos. SOUNDBITE: George Tzogopoulos, Hellenic Foundation for European and Foreign Policy, saying (English): "Political chaos and social instability will follow. Smalll business and enterprise will become immediately bankrupted, and the new Greek currency will be devaluated." Attempts continue to form a unity government. Greek voters, who have had enough of austerity, are likely to go to the polls again as soon as mid-June. EU leaders have warned that without a government backing the 130-billion euro rescue plan agreed in March, Greece would stop getting aid and could find itself pushed out of the euro. Joanna Partridge, Reuters

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Greek instability fuels euro exit fears

Sunday, May 13, 2012 - 02:20