Monday 3 October 2011
World stocks kicked off the last quarter of 2011 lower
the yen and core government bonds rose as concerns grew over the impact a Greek default would have on Europe's banks after Athens admitted it will miss deficit targets.
A sharp fall in shares of Franco-Belgian financial group Dexia, highly exposed to Greek loans, highlighted concerns about the extent to which a default in Athens would damage already fragile European banks.
The 2012 draft budget approved by Greece's cabinet on Sunday predicted a deficit of 8.5 per cent of gross domestic product (GDP) for 2011, well short of the 7.6 per cent target.
Policymakers looked no nearer to agreeing on a definitive solution to the euro zone debt crisis. Officials meeting on Monday are discussing ways to leverage the bloc's rescue fund and pressure Greece to implement agreed structural reforms.
"Ultimately, Greece would need to see its debt written down by more and with that you need probably some kind of shoring up of the banking sector," said Alec Letchfield, chief investment officer at HSBC Asset Management.
A sharp fall in shares of Franco-Belgian financial group Dexia, highly exposed to Greek loans, highlighted concerns about the extent to which a default in Athens would damage already fragile European banks.
The 2012 draft budget approved by Greece's cabinet on Sunday predicted a deficit of 8.5 per cent of gross domestic product (GDP) for 2011, well short of the 7.6 per cent target.
"Ultimately, Greece would need to see its debt written down by more and with that you need probably some kind of shoring up of the banking sector," said Alec Letchfield, chief investment officer at HSBC Asset Management.
