Markets lower on Greece and Hungary fears

EUROPEAN stock markets lost ground yesterday as the shine came off a possible deal with Greece’s lenders.

Leaders also threatened to remove Hungary’s EU funding over budgetary worries, while France kept campaigning to tax financial transactions.

The FTSE 100 closed down 0.5 per cent, having hit a six-month high on Monday, while in Paris the Cac 40 lost 0.5 per cent and Germany’s Dax fell 0.3 per cent.

“It is preferable to achieve an agreement [on Greek debt] in January rather than February,” said EU Commissioner Ollie Rehn, insisting yesterday that an agreement between creditors and the Greek government is “very close.”

Leaders also stepped up action against Hungary, claiming the country’s budget plans are not sufficiently restrained. Forecasts suggest its deficit will be above three per cent of GDP next year, and the EU is threatening to cut spending on the country if it does not address the issue.

Meanwhile French finance minister Francois Baroin asked the Danish presidency of the EU to look more closely into appropriate levels at which a financial transaction tax could be set.