Markets slump over Greek crisis
European markets slumped today as economic and political chaos in Greece triggered warnings of a continent-wide debt crisis.
Nout Wellink, a member of the European Central Bank’s Governing Council, warned that the EU bailout fund would have to double to €1.5 trillion if Greece fails to pay its debts and spreads financial turmoil to other countries.
The warning came as Greek prime minister George Papandreou prepares to reshuffle his government in an attempt to get austerity measures through parliament.
The FTSE 100 Index, also troubled by dire UK retail sales figures, fell 1.2%, while Germany’s DAX dropped 0.8% and the CAC-40 in France slumped 1.5%.
The euro this morning hit its lowest level in a month.
The uncertainty also comes amid continued reaction to Finance Minister Michael Noonan's announcement yesterday that the Government wants to burn senior bondholders at Anglo Irish Bank and Irish Nationwide Building Society.
German Chancellor Angela Merkel is to attend a press conference with the ECB later today, which is expected to offer some response to Minister Noonan's proposal.
The ECB has resisted such a move in the past.
French President Nicolas Sarkozy today urged EU members to "show a spirit of responsibility and understanding of the need for compromises" to protect the euro.
Mr Sarkozy said Europe needs to defend the single currency and European institutions.
He was speaking a day ahead of a meeting with the German chancellor for crisis talks on the problems besetting the eurozone.
