Greek shares slide as Athens’ debt worries weigh on European stocks

Greek shares slumped on Monday, as a lack of concrete progress on the country’s debt problems pegged back European stock markets.

Athens’ benchmark ATG equity index fell 6.2 per cent, underperforming a 0.8 per cent decline on the broader, pan-European FTSEurofirst 300 index. The ATG is down by around 13 per cent since the start of 2015, compared to a 12 per cent gain on the FTSEurofirst.

Greece debt talks

Talks between Greece and its creditors had ended in failure on Sunday, with European leaders venting their frustration as Athens stumbled closer to a debt default that threatens its future in the euro.

The Athens stock market has been especially volatile, surging one day on prospects of an agreement only to then fall back as those expectations have been dashed.

The ATG index had already fallen 5.9 per cent on Friday, and Greek bank shares bore the brunt of the new sell-off on Monday.

The Athens Stock Exchange FTSE Banks Index dropped 12.5 per cent, with National Bank of Greece falling 11.6 per cent and Bank of Piraeus slumping 16 per cent.

“There’s been no progress on Greece, so I expect European stock markets will undergo further selling pressure in the near-term,’’ said Berkeley Futures' associate director Richard Griffiths.

Germany’s DAX retreated 1.1 per cent to 11,071.53 points, leaving the index some 11 per cent below a record high set in April, while France’s CAC declined by 1 per cent.

Metro worst-hit

German retailer Metro was among the worst-performing stocks, retreating 3.8 per cent after agreeing to sell its Galeria Kaufhof chain to Canadian department store operator Hudson’s Bay for €2.8 billion — less than some estimates of a €2.9 billion price tag for Galeria Kaufhof.

Italy’s FTSE MIB equity index fell 1.6 per cent, with banking group Intesa Sanpaolo dropping 2.5 per cent as worries over Greece’s debt situation hit the Italian bond market.

Economic stimulus measures and record low interest rates from the European Central Bank (ECB) have cushioned some of the blows to European stock markets from Greece so far this year.

The DAX and CAC both remain up by around 13 per cent, but traders said investors could quickly sell out of any stock market rallies while the Greek situation remained unresolved.

“Sentiment remains negative with rallies likely to be sold until there is some positive news what a Greek deal is concerned,’’ said Peregrine & Black senior sales trader Markus Huber.