Eurozone crisis: Markets fall as Greece pleads for more time

By DOMINIC JEFF
Published on 23/08/2012 04:51

WORLD markets slumped yesterday as Greek plans to slow the pace of public spending cuts dragged the eurozone debt crisis back into the spotlight.

Greek prime minister Antonis Samaras said the country is demanding no additional money but needs two years’ breathing space in order for its battered economy to recover enough to sustain the onslaught of further austerity measures.

He was speaking at the beginning of a gruelling series of meetings as he tries to persuade other European leaders to relax Greece’s deficit reduction deadline, starting with eurozone chief Jean-Claude Juncker.

Markets could surge on the back of further efforts to shore up Greece and prevent it leaving the single currency but, with politicians in northern Europe looking entrenched in their opposition, traders were unwilling to bet on a positive outcome for the talks.

Ishaq Siddiqi, market strategist at ETX Capital, said: “The pressure is really on Samaras to convince Juncker that his country is committed to servicing its debt.

“Samaras has more work to do in the days ahead as he meets German and French leaders, and again, any signs that EU leaders are uncomfortable with Greece’s plan would surely send the bulls to the exits and put the ‘Grexit’ scenario back on the cards.”

Bank of England policymaker Adam Posen added his voice to those warning Germany that it would be unwise to enforce too closely the terms of sovereign bailouts made to the poorer EU countries. He said a break up of the euro would backfire on Germany.