Stockmarkets tumble amid further concerns about the future of Greece

THE gloss was swiftly wiped off the positive gains made on the stockmarkets on Monday when shares across Europe fell yesterday following more concerns about Greece’s future.

The ISEQ fell 1.3%, after a rise of 7.2% on Monday, a day which also saw European stocks record their biggest gain in 17 months.

Yesterday, however, AIB fell just over 4%, to €1.32, while Bank of Ireland was down 2.5%, to €1.63. Irish Life and Permanent dropped 3.6%, to €2.61.

Elsewhere, the airlines also suffered, with Ryanair dropping 1.8%, to €3.42, and Aer Lingus falling just under 1%, to 69 cent. CRH was down close to 2%, to €19.79.

Results were similar across Europe with France’s CAC 40 sliding 0.7% and Britain’s FTSE 100 falling 1%. In Greece, the benchmark ASE Index tumbled 2.5%, while Spain’s IBEX 35 dropped 3.4%. US stocks also slipped in early trading yesterday, easing from the previous session’s hefty gains.

“You cannot resolve the debt crisis by issuing more debt or putting up guarantees,” said Christian Blaabjerg, the Hellerup, Denmark-based chief equity strategist at Saxo Bank. “Markets will come back and test the will of the ECB/EU on how to deal with this enormous debt.”

National benchmark indexes fell in all 18 western European markets, except Germany and Switzerland.

Also yesterday, Moody’s Investors Service said no significant action on Ireland’s ratings is expected in the short run. It did warn, however, that it may downgrade its ratings on Portugal and that Greece’s rating could fall to as low as junk. Rating agency Standard and Poor’s cut Greece’s sovereign rating to junk level in April.

The International Monetary Fund (IMF) said that while Greece’s public debt is sustainable over the medium term, persistent low growth, or even a moderate economic jolt, could set back the country.

“The overriding question has been: When all is said and done, can they cut their deficit in a meaningful way?” said Quincy Krosby, market strategist with Prudential Financial.

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