Markets Fall As Greece 'Nearly Out Of Cash'

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Markets Fall As Greece 'Nearly Out Of Cash'

Post by Isakenaz on Mon Sep 12, 2011 1:47 pm

European markets have fallen amid eurozone debt concerns, including a warning Greece is less than four weeks away from running out of money.

Germany's Dax index (Xetra: ^GDAXI - news) closed down by 2.3% on Monday and France's CAC 40 (Paris: ^FCHI - news) down by 4%. The Spanish IBEX shed 3.4% and the Italian FTSE MIB 3.9%.

The banking sector was hardest hit. Three of France's biggest banks all suffered double-digit percentage falls.

In the London the FTSE 100 (Euronext: VFTSE.NX - news) lost 1.6%, on a day that also saw the ICB report release affect bank shares early on.

Although fears that Greece would default over the weekend failed to materialise, the suggestion by a senior German politician that Greece could leave the euro has further unsettled investors.

Greece's deputy economy minister Filippos Sachinidis has warned that the country risks running out of money next month.

And markets also appear to have been alarmed rather than relieved by the news that the Greek government is trying to raise an additional two billion euros with a new property tax among other levies.

While designed to mainly target high earners, the new tariff could prove a bitter pill for Greece's crisis-wary middle class.

Taxi drivers angered by government moves to open up their profession have called for a new 48-hour strike and the country's powerful electricity union vowed to block the attempt to charge homeowners' electricity bills with the new tax levy.

As part of the new cost-saving measures, finance minister Evangelos Venizelos also said the government would slash the salaries of elected officials, including the president, and tap into the deep pockets of wealthy Greek ship owners.

Even so, critics warn, it is unlikely Greece's lenders and markets will now breathe easier.

"These measures are disgraceful," said former finance minister Stefanos Manos.

"Rather than go after the bloated public sector, the government has saddled homeowners with more property taxes, for the umpteenth time."

All eyes now are on German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso, who are meeting in Brussels.

The markets are anxious for reassurance that eurozone countries can agree on an effective strategy after the resignation on Friday of the European Central Bank's chief economist, Jurgen Stark, raised suspicions that the bloc is divided on how to respond.

The eurozone crisis has further weakened the euro, which dropped to a 10-year low versus the yen, and a six-month low against the dollar.

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