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European shares fall amid worries over a deal on Greece

Eurozone finance ministers’ hardline stance on Greek bondholders is causing jitters in the European markets.

Image: Michael Probst/AP/Press Association Images

INVESTORS APPEAR WORRIED about the failure so far to reach a deal to cut Greece’s debt mountain as shares have fallen this morning across Europe.

Ten hours of talks among eurozone finance ministers in Brussels yesterday yielded a pledge to pay less than 4 per cent on the new bonds that Greece’s creditors would get in a swap meant to cut the country’s massive debt of some €100 billion.

Banks that hold Greek debt have already been asked to take a 50 per cent loss on their investments and want an average 4 per cent interest rate on new Greek bonds they will be issued with in a so-called debt swap.

However finance ministers are seeking coupons below 3.5 per cent for debt to be serviced until 2020 and below 4 per cent over the 30 years of the next Greek package, Bloomberg reports.

Negotiations involve a balancing act between getting a deal large enough to ensure that Greece can emerge from its debts but not so harmful to banks that it scares investors off from investing in any eurozone debt.

But with time running out to strike a deal – Greece must repay a €14 billion bond on 20 March – stocks dropped this morning on the main European markets.

In London the FTSE 100 of leading shares is down by 0.84 per cent at the time of writing. The Dax in Germany is down by over 1.25 per cent and in Paris the CAC 40 is down by 1.24 per cent.

Yesterday, shares on Wall Street largely fell with the Dow Jones and the Nasdaq closing down slightly. Only the more indicative S&P 500 finished up on 0.05 per cent.

Shares were up in Asia overnight, confining these latest market jitters over a Greek deal to Europe only at present.

- additional reporting from AP

About the author:

Hugh O'Connell

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