Greek poll plan derails markets

Plans for fresh elections in crisis-torn Greece derailed markets today as relief that the eurozone had dodged recession proved short-lived.

Greek president Karolos Papoulias admitted last-ditch talks to form a coalition had failed and a caretaker government will be formed tomorrow ahead of another election, expected to be held in the middle of June.

The new poll is thought likely to see an anti-austerity radical left wing group increase its share of the vote, and could lead to Greece defaulting on its debts and being expelled from the eurozone.

The fresh uncertainty over Greece saw the FTSE 100 Index fall 0.5% after a 2% fall yesterday wiped £28.5bn (€34.5bn) from its value.

It had been up earlier in the session after figures showed that better than expected 0.5% growth in Germany had helped the eurozone avoid recession.

The region’s 17 economies failed to grow in the first quarter of 2012, although this was slightly better than the predicted 0.2% decline.

Markets in Germany and France were down 0.6% and 0.3% respectively, although the Dow Jones Industrial Average in the US made slight gains.