Greek debt crisis hits world markets as short-selling ban begins
Markets across the world tumble after Greek debt downgraded to junk status by credit agencies
Wednesday, 28, Apr 2010 09:29
By Matthew Champion.
Markets across the world have felt the force of Greece's escalating financial crisis, as the struggling eurozone economy had its debt downgraded to junk status by credit agencies.
In Japan the Nikkei closed down more than 2.5 per cent, a day after the FTSE 100 slipped 2.6 per cent and the Dow Jones 1.9 per cent.
In Europe on Wednesday meanwhile markets in Frankfurt, Paris and London were all opening down around 0.5 per cent.
Greek bank shares fell by nine per cent on Tuesday after Standard and Poor rated Greek bonds as junk, prompting Athens to announce a two-month ban on short-selling on shares listed on Greece.
The credit downgrading means the two-year bond yield in Greece is above 22 per cent, while for ten-year Greek bonds the interest rate is 10.13 per cent - a record for a eurozone economy.
There are also fears that Portugal could transform the crisis into a two-prong emergency after its debt was also downgraded on Tuesday. Portuguese shares closed down 5.4 per cent on Tuesday.
Greece has requested $52 billion from eurozone governments and the International Monetary Fund to back up its central finances.
But with Germany, the eurozone's largest economy, so far reluctant to commit, EU president Herman van Rompuy has called an emergency meeting of leaders in mid-May ahead of a looming May 19th deadline for Greece to pay $12 billion in bond payments.