Stocks may head southward ahead of local elections

Greek stocks may come under further pressure today after giving up 3.6 percent last week. With the ruling Socialists tossing about the idea of calling the country to national elections should there be low support for ruling PASOK in Sunday’s local elections, Greek bonds spreads widened on concerns as to whether the government can push ahead with austerity measures needed to tame the country’s budget deficit. Greek bonds led weekly declines by peripheral European securities on Friday, touching 814 basis points, the widest level since the end of September. The yield on Greece’s 10-year bond rose 29 basis points, or 0.29 percentage points, to 10.69 percent. News of Piraeus Bank’s move to boost capital by just over a billion euros via a rights issues and convertible bond sale may boost selling pressure on the stock, which dipped 4.35 percent on Friday. «Uncertainty about the terms of the upcoming capital increase may fuel short-term pressure on Piraeus Bank’s shares,» brokerage firm National Securities said in a note on Friday. «Following National Bank’s capital increase, the move may also add pressure on domestic peers to raise capital.» Piraeus Bank is scheduled to seek investor approval for the plan on November 23.

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