GREECE IN TURMOIL
CROWDS in Athens exchanged firebombs and stones with police using teargas yesterday as protests in the Greek capital’s Syntagma Square turned violent.
Street battles raged amid shattered storefronts as tens of thousands joined protests on the back of a 24-hour strike called by Greece’s civil service and public sector unions.
The unrest played havoc with the markets, helping send the price of brent crude oil down five per cent to $113.60 a barrel and the Dax down 1.3 per cent, the Nasdaq 1.8 per cent and the FTSE 100 one per cent as investors bet that a wave of Greek chaos could engulf the world economy.
Following an emergency cabinet meeting, embattled Prime Minister George Papandreou issued a plea for his political opposition to join him in a coalition government after failing to muster enough support for another round of austerity cuts, which parliament must pass to receive its next tranche of rescue money.
As the deadlock between the Eurozone’s key players continued, EU officials began to talk of dispensing Athens’ next €12bn (£10.5bn) in bailout funds in early July, whether or not an agreement has been reached on Greece’s new aid package.
Eurozone ministers have set a deadline of 20 June to decide what form the latest rescue, which could cost as much as €120bn, will take. But with little sign of a compromise between the European Central Bank (ECB) and Germany on the key issue of private sector involvement in the deal, officials are privately admitting that next week is unlikely to see a deal signed.
In a sign of growing anxiety about the contagion effects of the Greek crisis, Moody’s put France’s three biggest lenders on review for a credit downgrade due to their exposure to Athens. The agency said that BNP Paribas, Credit Agricole and Societe Generale are all vulnerable to the rising chance of a Greek default.
Yields on Athens’ two-year debt set yet another record of 28 per cent, while ten-year rates reached 17.9 per cent. The euro dropped 1.85 per cent against the greenback and 0.95 against the Swiss franc.