World stocks drop as worries over Greece intensify

AP Business Writer

(AP:MILAN) World stock markets dropped Monday as worries intensified over the condition of the eurozone and whether Greece is edging towards leaving the single currency union.

In Athens, Greek party leaders were scheduled to resume talks aimed at forming a government. But as the political wrangling dragged into its second week, markets contemplated the threat that the crisis-stricken country would not meet the terms of its bailout and drop out of the currency club.

`'Markets continue to feel the pressure and the stakes continue to rise as what was declared unthinkable a year ago or so now starts to permeate mainstream thinking in Europe," said Michael Hewson of CMC Markets.

Britain's FTSE 100 fell 1.7 percent and Germany's DAX tumbled 1.95 percent. France's CAC-40 lost 2.27 percent. Wall Street also appeared set for a lower opening, with Dow Jones industrial futures down 0.8 percent to 12,686 and S&P 500 futures losing 0.9 percent to 1,337.30.

Taking the hardest hits were the Athens Stock Exchange, which saw shares drop 3.5 percent, and Spain's Ibex, which fell 3.06 percent on continuing concerns that the country's crippled economy would not be able to keep a handle on its borrowing costs.

Problems in Europe _ which also included a loss for Chancellor Angela Merkel's party and by extension her austerity policies in a state election _ overshadowed news that China's central bank cut bank reserve requirements by 50 basis points to encourage lending.

Asian stocks also endured losses, although one notable exception was Japan, where the benchmark Nikkei 225 index rose 0.2 percent to close at 8,973.84.

Investors' concern about China's economic outlook did not appear to ease despite the Chinese central bank's decision to reserve requirement, which is expected to free over 400 billion yuan ($63.4 billion) in financing.

"The market will remain unstable in the near term," said Zhang Yang, an analyst at Sinolink Securities, based in Shanghai.

Investor nervousness remains rampant because of political uncertainty in Greece and a possible fallout to the rest of the region.

President Karolos Papoulias' efforts to broker a deal among party leaders have so far failed after May 6 elections failed to decide an outright winner. More talks to form a coalition were set for Monday.

Chances of success have been diminished after one leftist party pulled out of the talks, leading the country one step closer to new elections _ and bringing its continued membership in the euro into serious doubt.

Wall Street ended last week with a decline after JPMorgan said it lost $2 billion on poorly-thought-out trades.

Benchmark oil for June delivery was down $1.72 to $94.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 95 cents to settle at $96.13 in New York on Friday.

In currencies, the euro fell to $1.2869 from $1.2925 late Friday in New York. The dollar sank to 79.87 yen from 79.90 yen.


AP Business Writers Yuri Kageyama contributed from Tokyo; Elaine Kurtenbach and researcher Fu Ting contributed from Shanghai.

Follow Yuri Kageyama at Twitter at Elaine Kurtenbach at

6 thoughts on “World stocks drop as worries over Greece intensify

  1. Eight Skate and Don't be Late!!! Everyone better be short on the short term! Hold onto your shorts because bigger problems then Greece are ahead of us. I bet those monthly triangles will be turning down before years end. That is if the Gov't doen't intercede again because it will be "kick the can down the road" again. Of course there will be a time when what the Gov't does won't work and this could be it. Could this election year be different then many of the others? These are interesting times! Enjoy the volatility. In my opinion this Europe Credit Crisis is kicking off the resumption of the World Global Depression. The socialist of the world including our current administration are about to find out what happens when you try to regulate and micro-manage a free market. Too bad all of us will have to pay the price. Just look at Greece, what a perfect example of what is coming down the pike.

    1. JPs on the right track. Europe is only a side show as the Euro is not going away anytime soon if the elites can only hold their insolvent world banking system together. The banking system, based on Basel III, is the elites means of controlling the political classes that will do anything to maintain power over the masses. This banking system is collapsing and the masses are unwilling to pay for their foolish recklesness and greed. The numbers of politicos and CEOs quitting should continue.

    2. Very nicely said, JP. I couldn't agree more. What is a shame is that American voters are not paying attention to what is happening to our wonderful country. I hope I am wrong but fear that I am correct. Hollywood gets more attention than WA D.C.

      1. even as corrupt as hollowood is , and as drunk the people elected to WA D.C. are more intoxicated and cowardly than the ones in hollowood.

      2. Hate to say this gg but you are so right! Hollywood does gets more attention, I was just talking to a friend about that this weedend.

        and JP is on the money on what he just said! im already getting ready to short the market with 3x leverage etf stock TZA.

        1. Already short AZO and AAP. See what happened to GMCR watch SBUX. Retailers LULU, EL, RL take your pick. The higher they are the harder they fall. Booyah! hehe

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