European stocks fell for the fifth consecutive day on
Friday over concern about Greece and Spain as the price of oil fell and
investors moved their money into German bonds.Policymakers and other experts say although up to 75 percent of
Greeks back the euro, they seem unwilling to elect the politicians who
will adopt the tough measures required to stay there.
Erik Nielsen, global chief economist at Italy's largest bank Unicredit, said the situation in Greece was becoming "increasingly serious" as people were divided over whether to stay in the eurozone.
"Opinion polls in Greece do not suggest a clearer picture for the June election, unfortunately, and there is a significant risk that Greece will slide further towards an economic collapse," Nielsen told media.
Nielsen said that Greece accounted for only 2.5 percent of the eurozone's gross domestic product and even less in terms of trade flows. He said although volatility was expected in the markets in coming weeks, he predicted any sell-off would be contained if Greece left the euro."Banks and other financial institutions in Europe are now fully prepared for the worst," he said. "However, markets will likely remain very fragile during this period. We have no doubt that the European authorities, governments and the European Central Bank, will be extremely flexible in their response."As the eurozone economy - driven by Germany - slowly recovers during the second half, we expect a degree of normality to return."
"We remain confident about Italy and think contagion will be more pronounced in Spain and Portugal."
Greece's caretaker government was sworn in this week after elections failed to produce a viable coalition to lead the country. Leaders across Europe are nervous about the forthcoming election."Suddenly the prospect of Greece leaving EMU (European Monetary Union) looks horribly real," said Mark Cliffe, the chief economist at the ING Bank, based in Amsterdam.
Erik Nielsen, global chief economist at Italy's largest bank Unicredit, said the situation in Greece was becoming "increasingly serious" as people were divided over whether to stay in the eurozone.
"Opinion polls in Greece do not suggest a clearer picture for the June election, unfortunately, and there is a significant risk that Greece will slide further towards an economic collapse," Nielsen told media.
Nielsen said that Greece accounted for only 2.5 percent of the eurozone's gross domestic product and even less in terms of trade flows. He said although volatility was expected in the markets in coming weeks, he predicted any sell-off would be contained if Greece left the euro."Banks and other financial institutions in Europe are now fully prepared for the worst," he said. "However, markets will likely remain very fragile during this period. We have no doubt that the European authorities, governments and the European Central Bank, will be extremely flexible in their response."As the eurozone economy - driven by Germany - slowly recovers during the second half, we expect a degree of normality to return."
"We remain confident about Italy and think contagion will be more pronounced in Spain and Portugal."
Greece's caretaker government was sworn in this week after elections failed to produce a viable coalition to lead the country. Leaders across Europe are nervous about the forthcoming election."Suddenly the prospect of Greece leaving EMU (European Monetary Union) looks horribly real," said Mark Cliffe, the chief economist at the ING Bank, based in Amsterdam.
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