The possibility of Greece’s radical leftist Syriza party coming to power continues to hit share prices in Athens and force up the cost of borrowing for the Greek goverment.
Investors have been spooked by the idea that Syriza – which is popular with voters – might end up running the country in snap elections.
It has pledged to abandon austerity measures and nationalise banks.
Prime Minister Antonis Samaras is playing a risky game, if his nominee for president does not win a vote in parliament then an early general election has to be called.
Greek stocks suffered their steepest daily fall in more than a quarter century on Tuesday and its bond yields jumped.
Wednesday was calmer with the main Athens share index ending the day just one percent lower, but the amount of interest Athens had to offer on bonds maturing in three years time rose to 9.757 percent.
Stocks resumed their sell-off on Thursday, with Athens’s ATG benchmark index dropping 5.4 percent by late afternoon.
Trader Alex Kyriakides told euronews: “Fund managers counted on the current government staying in power for at least another year and a half. The possibility of early elections took them by surprise and led to the sell off. The banks are particularly vulnerable as investors are skeptical about the opposition’s proposal for state control of the banking system.”
For the moment Greece is living hand to mouth on so-called ‘Troika’ money from the EU and International Monetary Fund, which want continued austerity agreements before doling out more.
Now the election uncertainty is driving away those private investors who were dipping their toes into the Greek bond market.
Euronews’ Athens financial correspondent Symela Touchtidou reports: “Greece sees its sources of liquidity drying up. It is not known when the deal with the troika will be struck so that the final tranche of the aid package can be disbursed. Plus international markets are turning their back on the country.”