European shares fell sharply on Tuesday, closing near their worst levels in twenty six months.
That was a reaction to European finance ministers talking about making banks take bigger losses on the money they have loaned to Greece; they are also delaying the next instalment of aid to Athens.
All this is raising concerns that Greece could default and the political uncertainty is fueling the sell off.
Analyst Michael Hewson of CMC Markets said: “This uncertainty is like a cancer in the market. We’re really seeing that reflected in asset values. Yes I do think they’ll receive the money but given that (Finance Minister Evangelos) Venizelos said the money was more or less guaranteed, why are they delaying it, this just fosters the uncertainty within the market.”
European banks were the top decliners on fears the euro zone sovereign debt crisis is spreading to the banking sector – as evidenced by Dexia.
The index measuring the share prices of the region’s leading lenders has slumped thirty six and a half percent this year.
The euro picked up some, but remains very weak against the dollar.
Euro zone debt fears hit shares