Markets slide on Greek turmoil

World stocks dropped and the euro fell to a four-month low against the dollar yesterday after Greece said it would hold new elections, and worries increased about its possible exit from the eurozone.

Gold touched a four-and-a-half month low, with the euro’s weakness unnerving investors over the profitability of holding euro- denominated assets.

The political turmoil in Greece kept pressure on markets. Investors have been concerned that long-lasting problems in the eurozone and a likely recession will hit global growth.

After Greece’s president said the country will hold new elections, the euro slumped and investors fled to the safe-haven dollar.

The news “triggered the fall through $1.2800 and it looks like they can’t compromise so they will have to hold elections,” said Boris Schlossberg, director of FX research at GFT in Jersey City, New Jersey.

The euro fell for the fifth of the last six sessions on chances left-wing politicians opposed to Greece’s international bailout could win the June elections.

A report showing the Greek economy slid deep in recession added to the euro’s woes. The euro last traded down 0.5% at $1.2761, with the session trough at $1.2752, the lowest since Jan 18.

The MSCI world equity index fell 0.8%, while the FTSE Eurofirst index of top European shares ended down 0.7%. US stocks were lower, with the S&P 500 index hitting a three-month low. Data showed US retail sales rose 0.1% in April.&

— Reuters