Strongest indication to date that Greece is headed for debt default

THE strongest hint yet that Greece is headed for debt default came yesterday when its government admitted it will miss deficit targets this year and remain in recession next year.

The news knocked most international stock markets; but Ireland’s ISEQ managed to open the week with a marginal gain.

The ISEQ closed the day up by 0.6% — CRH, DCC, FBD, Aryzta, ICON, Paddy Power and Tullow Oil recording the most eye-catching gains. However, the likes of Irish Continental Group, Smurfit Kappa, Kerry Group and Providence Resources recorded the highest falls.

Even though only recording a minute increase, Dublin proved nearly unique. Elsewhere, there was a widespread downward trend on international exchanges; starting with the main Asian markets and continuing throughout Europe later in the day.

Yesterday’s falls arguably could have been more severe, but London’s FTSE-100 index was still down just over 1%, the CAC in Paris was down 1.85%, the Frankfurt DAX shed just under 2.3%, the Borsa Italiana was down 1.31% and Spain’s IBEX index shed 2.26%.

The US markets were down slightly yesterday evening, but had managed to stem some earlier losses, thanks to better than expected manufacturing output data (expanding in September, according to monthly figures, albeit at its slowest growth level in more than two years, which was seen as a sign of stalling overall economic recovery) — which topped analyst predictions. The Nasdaq, Dow Jones and S&P-500 were all down by 1% to 2%.

Continuing concern over the Eurozone debt crisis saw the euro weaken further. French President Nicolas Sarkozy and German Chancellor Angela Merkel are set to meet in Berlin next weekend to thrash out solutions. The euro fell to an eight-month low against the dollar.