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Greek debt fears hurt European stocks

Greek debt fears hurt European stocks

Swooning bank shares contributed to a drop in European stock markets on Monday as investors fretted over whether Greece will need a second financial bailout in just over a year. U.S. stocks continued to be shored up by last week's robust jobs figures.
Though reports from Friday that Greece was considering leaving the euro have been flatly denied, investors still think Greece will need more assistance from the eurozone and the International Monetary Fund as it remains unable to tap bond markets.
The resurfacing of Greece's debt woes weighed on stocks in particular and kept the euro under pressure.
"Uncertainty over new bailout terms for Greece, and their implications for Portugal and Ireland, remain a dark cloud in the region," said Carl Campus, an analyst at BMO Capital Markets.
As EU officials this weekend acknowledged that Greece may need more help, many investors think that a restructuring of Greece's debt is inevitable. That would mean holders of Greek bonds will have to accept that the value of their assets are not what they thought they were when they first bought them.
Greek bonds are owned by a wide variety of institutions and they could all be impacted by a potential restructuring. As a result, bank shares across Europe have suffered.
In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 5,953 while Germany's DAX fell 0.9 percent to 7,426. The CAC-40 in France was 1.1 percent lower at 4,016. Bank stocks, such as Deutsche Bank AG and BNP Paribas SA were all among the biggest losers.
After showing some early poise, the euro was back under pressure when U.S. traders got to their desks. On Friday, the currency got hammered after German magazine Der Spiegel said Greece was considering leaving the euro. The online report came out after European stock markets had closed.
By mid afternoon the euro was trading 0.7 percent lower on the day at $1.4284. On Friday, the single currency slid to a low of $1.4306 from around $1.45 before the euro exit speculation.
Although European markets are struggling, Wall Street opened steadily, as investor sentiment remains buoyed by last Friday's forecast-busting U.S. jobs data for April. The Dow Jones industrial average was flat at 12,639 while the broader Standard & Poor's 500 index was up less than a point at 1,341.
Investor sentiment in the U.S. remains supported by the news from the U.S. Labor Department that private employers hired 268,000 people in April, the most since February 2006. Taking into account job cuts of government workers, the economy added a total of 244,000 jobs overall last month, well above the 185,000 jobs that analysts had predicted and easing worries that the economic recovery was faltering.
The U.S. jobs figures also continued to prop up commodity and energy markets after last week's big declines. Improved hopes over the U.S. economic recovery have helped allay fears of much lower demand for such products.
In the oil markets, a barrel of crude oil as traded in New York rose above $100 a barrel for a while. By mid afternoon London, the benchmark rate was up $2.34 at $99.52 a barrel.
Earlier in Asia, Hong Kong's Hang Seng rose 0.8 percent to 23,336 while Australia's S&P/ASX 200 added 0.3 percent to 4,756.80.
But Japan's Nikkei 225 stock average ran into headwinds as the country struggles to rebuild following the March earthquake and tsunami. Down 0.7 percent at 9,794.38, the index has lost 4 percent since the March 11 disasters killed more than 25,000 people, destroyed towns, upended a nuclear power plant and washed away entire industries.
Mainland Chinese shares edged higher as investors snapped up bargains after last week's big losses.
The benchmark Shanghai Composite Index gained 0.3 percent to 2,872.46 and the Shenzhen Composite Index gained 0.7 percent to 1,203.07. Shares in nuclear energy and railways led the gains.
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Pamela Sampson in Bangkok contributed to this report.


Updated : 2021-10-22 03:05 GMT+08:00