World stocks hit by panic in Eurozone
STOCKS slumped around the globe yesterday as renewed worries over the Eurozone crisis pushed investors to flee risky assets.
There were fears that Greece could be forced to leave the euro, after a second day of attempts to form a government failed. Fresh elections are expected to be held next month, adding to market instability.
Meanwhile Spain was forced to announce plans to bail out its third biggest lender Bankia, scaring investors in the peripheral nations.
The FTSE 100 fell 1.78 per cent to 5,554.55, its lowest level this year.
Germany’s DAX dropped 1.9 per cent, the Italian FTSE MIB lost 2.37 per cent and the Dow Jones fell 0.6 per cent. The French CAC fell 2.78 per cent, though allies of new Socialist President Francois Hollande indicated he may tone down his anti-austerity promises.
Greece’s stock market plummeted a further 3.62 per cent to its lowest level since 1992, following Monday’s 6.7 per cent drop.
Voters rejected the major parties in the weekend’s elections, giving them only 32 per cent of the vote, leading to a surge in support for anti-bailout parties.
Investors parked cash in safer German and British government bonds. The yield on 10-year bunds fell 0.063 percentage points to 1.54 per cent, and on gilts fell 0.068 points to a four-month low of 1.94 per cent.
Meanwhile yields on 10-year Greek bonds rose another 0.144 points to 23.132 per cent, while Spanish yields gained 0.085 percentage points to 5.843 per cent and Italy’s rose 0.05 points to 5.454 per cent.