Greece uncertainty hits markets

The uncertainty over Greece has hit markets around the world, with the Dax in Frankfurt and the CAC 40 in France both down around 3%, while Asian markets also suffered sell-offs overnight.

Eurozone ministers have cancelled their meeting about the debt-stricken country planned for October 13 after the country admitted it would fail to meet its tough deficit reduction measures.

A decision is not now expected until the second half of the month following a review of Greece’s economy.

Greece had previously warned it will ultimately go bankrupt if it stops receiving the bailout money, although it is believed to have enough money for the immediate future.

The losses on world markets were also driven by reports that eurozone finance ministers are planning to ask private bond holders to accept bigger losses on Greece’s debt to reduce the pressure on the country.

Meanwhile, French and Belgian governments pledged to underwrite loans to Dexia to shore up confidence in the bank.

Kathleen Brooks of Forex said: “As the EU’s high command dallies about how to help Greece and implement fiscal consolidation, member nations have to prop up their banking sectors.

“This is totally dysfunctional, and highlights the challenges faced by the currency bloc as it tries to weather out this crisis.”