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European Stock Futures Decline amid Concern over Greece

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Source: Bloomberg

European stocks retreated, extending the Stoxx Europe 600 Index’s lowest level this year, amid deepening speculation Greece will have to leave the euro currency bloc.

Banks declined after Greece’s central bank chief said citizens had withdrawn as much as EUR700 million (US$891 million) since the May 6 elections. BHP Billiton Ltd lost 2.7 per cent as copper slid to a four-month low.

The Stoxx 600 fell 0.9 per cent to 243.67 at 8:01 am in London, its lowest level this year. The gauge has fallen 10 per cent from this year’s peak on March 16. Futures on the Standard & Poor’s 500 Index slid 0.3 per cent, while the MSCI Asia Pacific Index sank 2.6 per cent.

“The Greek drama continues to weigh on global markets,” said Nam Truong, a trader at Capital Spreads in London. “With support building in Greece for anti-austerity parties, the likelihood of Greece exiting the euro intensifies.”

The Stoxx 600 fell Tuesday for a second day, with the benchmark gauge set to erase all of its 2012 gains, as Greece called a new election after politicians failed to form a government. US and Asian stocks extended the global selloff.

The euro fell to the lowest level in almost four months as Greek leaders Wednesday seek an agreement in Athens to form an interim government.

New elections in Greece may be scheduled as early as June 10 after President Karolos Papoulias failed to broker a governing coalition in meetings Tuesday with Pasok party head Evangelos Venizelos and other political leaders.

German Chancellor Angela Merkel and new French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters committed to the austerity demanded to stay in the euro.

Requests for measures to bolster growth will be “considered” and the European Union may also “approach Greece with proposals,” Merkel said late Tuesday at a joint press conference with Hollande during his first official visit to Berlin. “Greece can stay in the euro area.”