World Stocks Hit By Greece Debt Deal Uncertainty

Published January 24, 2012 9:09AM (EST)

BANGKOK (AP) — Europe's stock markets sank and Wall Street was poised to fall Tuesday as Greek bond holders remained at odds with finance officials over the interest rate they'll receive from new bonds that aim to cut Greece's debt mountain.

In Asia, stock markets mostly rose though trading was subdued because of Chinese New Year holidays. Markets in Hong Kong, mainland China, South Korea, Taiwan, Singapore, Malaysia and Vietnam were closed.

As trading got underway in Europe, Germany's DAX fell 0.6 percent to 6,396.80 and Britain's FTSE 100 was down 0.5 percent at 5,753.30. France's CAC 40 dropped 0.7 percent to 3,315.90.

Auguring losses on Wall Street, Dow Jones futures slipped 0.3 percent to 12,610.

Hopes that Greece will reach a deal with private creditors on lowering its debt, thereby easing a key flash point in Europe's debt crisis, have been dented by tough negotiations with creditors.

The interest rate is the key remaining variable in a complicated debt swap designed to slice some euro100 billion off Greece's massive debt pile and bring it down to 120 percent of gross domestic product by 2020.

Finance ministers' insistence that the rate be less than 4 percent has met resistance from bond holders who already have to give up on 50 percent of the face value of their investments and are expected to give the country between 20 or 30 years to repay them.

An agreement is necessary if Greece is to get the next batch of bailout cash that would prevent a debt default the could rock Europe's financial system. Greece does not have enough money to cover a euro14.5 billion ($18.7 billion) bond repayment in March. A deal would allow the country to receive a second bailout package from other European governments and the IMF, and cut Greece's debt from an estimated 160 percent of its annual economic output to 120 percent by 2020.

In Asia, Japan's Nikkei 225 stock rose 0.2 percent to 8,785.33 despite the central bank cutting growth forecasts for the fiscal year ending March 2012 and the following year because of a slowdown in overseas demand and the strong yen.

Australia's S&P/ASX 200 closed little changed at 4,224.20. Indonesia's benchmark was up 0.1 percent at 3,994.91 and India's Sensex was 1.5 percent higher at 16,997.35 after the Reserve Bank of India lowered cash reserve requirements for commercial lenders.

Thailand's main index rose while New Zealand and the Philippines fell.

On Wall Street on Monday, the S&P 500 index eked out a tiny gain while traders kept an eye on talks in Europe to cut Greece's crushing debt load and prevent a global financial crisis. Other indexes ended slightly lower.

Benchmark crude was up 26 cents at $99.84 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.25 to end Monday at $99.58 after Iran again threatened to block shipments of crude from the Persian Gulf. The latest threat followed a widely expected decision by the European Union to embargo imports of Iranian oil.

In currencies, the euro was down 0.2 percent at $1.3001 after jumping the day before. The dollar rose 0.4 percent to 77.25 yen.

By Salon Staff

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