Friday, June 15, 2012
Markets await Greek election result
(UKPA) – 1 hour ago
Stock markets are on edge as a make-or-break moment for the eurozone at a general election in Greece approaches.
Success for anti-austerity parties, such as radical left-wingers Syriza, could lead to Greece leaving the euro, which would likely send stock markets into freefall.
A Greek exit from the euro could lead to contagion across the eurozone and beyond as the impact of a collapsed banking system and debt default in Greece spreads like a domino effect.
As the pivotal event approaches, speculation is mounting that central banks, including the Bank of England, Bank of Japan and US Federal Reserve, are preparing to launch emergency support measures to cushion the blow of an implosion in the eurozone.
In London, the FTSE 100 Index held up after the Bank of England and the Treasury cheered investors with plans for a multibillion-pound scheme to boost lending.
But analysts warned that this would be a temporary lift as the Greek election inched closer.
Kathleen Brooks, research director at Forex, warned: "There is one thing on the markets' minds and one thing on global policymakers' minds at the moment - will Greece manage to stay in the eurozone?"
The Greek election is being held against a backdrop of increased economic turmoil across the eurozone, with the likes of Spain and Italy seeing their borrowing costs soar as investors lose faith in the countries' abilities to control their finances.
A first election in Greece on May 6 produced a hung parliament, with Syriza a surprise runner-up to pro-bailout terms party New Democracy, but days of negotiations failed to deliver a coalition agreement, forcing this Sunday's election.
The latest official polls released showed that either New Democracy or Syriza could win on Sunday, although without enough seats in parliament to govern alone. The polls, however, suggested that in either case the winner would be able to secure enough support from like-minded parties to form a coalition.
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