Banks lead sell-off as Greece fear factor hits markets
Banking shares plunged this morning, leading markets lower, following news Greek prime minster George Papandreou has called a referendum over last week’s eurozone rescue deal.
French bank Credit Agricole dropped 10.15% to €5.10 while Société Générale plunged 10% to €18.97.
In the UK, Barclays was down 7.48% to 180.7p while Royal Bank of Scotland fell 6.5% to 22.65p and Lloyds fell 4.5% to 31p per share.
London’s FTSE 100 index continued to fall after initially shedding 100 points on opening to 5,338. By 9am it had fallen to 5,406.
The German Dax and the French Cac also lost ground, with the Dax seeing a near 3.8% drop to 5,905 and the Cac 40 falling 3.36% to 3,133.
The decision over whether Greece signs up to the eurozone rescue deal – which will see Greece given a €100bn loan and bondholders facing a 50% haircut – is now in the hands of the citizens of Greece.
Recent months have seen the Greek population rioting over the strict austerity cuts Papandreou has tried to push through as part of the conditions of receiving eurozone help.
The development has shaken investors, who fear Greece will reject the deal, escalating the wider eurozone crisis.
Overnight markets around the globe sold off as news of the proposed referendum emerged.
In the US, the Dow closed down 2.26% at 11,955 points, while the S&P 500 was off 2.5% at 1,253.
In Asia, shares were also lower, with investors fretting over weak Chinese manufacturing data.
The Nikkei closed down 1.7% at 8,836, while in Hong Kong, the Hang Seng was off 2.4% at 19,396.
Meanwhile Brent Crude dropped 1.5% to $107.9 per barrel and gold fell just over 1% to $1,722 per ounce.
This article was first published on Investment Week