Greek debt woes weigh on European stocks; euro rebounds

Major European bourses were lower on Monday as investors worried about whether Greece will need a second financial bailout in just over a year. The euro rebounded against the dollar in early trade in London.

The FTSE 100 index in the UK was down 0.50 percent mid session while the French CAC 40 index was off almost one percent.

In Germany, the DAX 30 index was down 0.91 percent. Greek stocks were also more than one percent in the red.

Though reports Friday that Greece was even considering leaving the euro have been flatly denied, investors think Athens will need more assistance from the eurozone and the International Monetary Fund as it remains unable to tap bond markets.

?What Friday’s reports have done is put the thorny subject of sovereign debt restructurings back at the top of the political agenda and the economic agenda,? Michael Hewson, market analyst at CMC Markets, told Associated Press.

EU officials this weekend acknowledged that Greece may need more help. Many investors, however, think that a restructuring of Greece’s debt is inevitable. That would mean holders of Greek bonds will have to accept that the value of their assets are not what they thought they were when they first bought them.

Greek bonds are owned by a wide variety of institutions and they could all be impacted by a potential

restructuring. As a result, bank shares across Europe have suffered.

Meanwhile, the euro rebounded against the dollar on Monday as dealers chewed on weekend reports over Greece?s debt problems.

In London morning trading, the European single currency rose to $1.4411 from $1.4335 late in New York on Friday.

“The euro has recovered modestly after falling close to 1.4300 on Friday evening as a Der Spiegel newspaper article reported that Greece had threatened its EU partners with quitting the single currency,» Derek Halpenny, global currency research analyst at The Bank of Tokyo-Mitsubishi UFJ, told AFP.

“Of course, the article was denied quickly but it was telling that such a rumour was given credence in the first place — surely an indication of how bad the situation in Greece is now getting.”

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.