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Greek shares slump further as financial markets fret over new government's anti-austerity pledges


economy

Greek shares slump further as financial markets fret over new government's anti-austerity pledges

Share prices in Athens were hammered by word that the new Greek government intends to press ahead with its campaign pledges to roll back austerity measures imposed under the bailout programme.

The main Greek stock market index was down a further 8.0 percent by mid afternoon. It has fallen 14 percent this week.

Shares of Greek power firm PPC and the country’s biggest port, Piraeus Port Authority, slumped as it was revealed that their part privatisations would be halted.

Ministers have also promised to reinstate laid-off public sector workers whose dismissal was ruled unconstitutional, restore cuts to pensions and reverse a reduction in the minimum wage.

Financial markets are looking on nervously as the cost of borrowing for the Greek government continues to ratchet up.

The Greek banking index was down over 20 percent on Wednesday, hitting a record low. It has plummeted 98.6 percent since late 2009, before Europe’s sovereign debt crisis started.

Traders said local investors feared the new government’s anti-austerity stance would make negotiations with the euro zone on a new aid deal difficult and jeopardise liquidity.

The combined value of the top four Greek listed banks, Alpha Bank, Piraeus Bank, National Bank of Greece, Eurobank Ergasias fell to about 12 billion euros ($13.6 billion).

“Should their collateral be disqualified by the ECB, they will have no money, and a bank with no money is not a bank … The price is just building in the expectation that things could go pretty badly,” said Simon Maughan, head of research at OTAS Technologies.

“A lot of local and retail punters … will be looking at the price action and wanting to get out, at any price.”

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