European markets fall from record highs as political uncertainty hits sterling

Emma Haslett
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The City will hold its breath on Greece until next week, analysts have suggested (Source: Getty)

Following the jubilant highs achieved by European markets on Friday, things looked rather more muted this morning. Stocks across Europe started the day down amid political and economic uncertainty, while Greece prepared to enter yet another last-chance saloon.

The FTSE 100 was down 0.29 per cent in early trading, while Germany's Dax fell 0.27 per cent and France's Cac dropped 0.23 per cent. The FTSEurofirst 300 composite index fell 0.2 per cent.

That was in contrast to Asian stocks, which largely finished the day higher, shrugging off disappointing news about Chinese exports, which fell 15 per cent in March. While the Hang Seng closed 2.2 per cent up, the Sensex rose 0.37 per cent - although the Nikkei edged down 0.01 per cent.

Meanwhile, too-close-to-call election campaigns in the UK created uncertainty in the currency market, pushing the pound down 0.3 per cent to $1.4587, close to a five year low.

The euro also fell against the dollar, by 0.33 per cent: one euro now costs $1.0569.

The currency is likely to experience further uncertainty this week as negotiations between Greece and its creditors continue ahead of the Eurogroup meeting next Friday.

After German newspaper Frankfurter Allgemeine Sonntagszeitung reported on Sunday that officials at last week's meeting were "shocked" by Greece's lack of progress at identifying a convincing programme of economic reforms - and that the Greek representative had demanded payment "like a taxi driver" - expect further concern as to whether Greece can, or should, remain in the Eurozone.

Until then, though, markets will be holding their breath.

"[The onus is on] Greece to smooth out the many points of contention with the Brussels Group this week in continuous discussions at both technical and political levels," said Daiwa Capital Markets' Robert Kuenzel.

"But with the next payment hurdle coming up only at the end of the month when Greek public sector salaries and pensions fall due, we do not expect financial calamity to hit Greece this week."

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