Greek impasse drags European stocks down

Varoufakis sounded optimistic after a meeting with European finance ministers on Monday that a deal could soon be reached [Xinhua]

Lack of progress in reaching a deal with Greece over a restructuring of its debt repayment is beginning to grind down European markets.

On Monday, the Stoxx Europe 600 Index (of 600 major companies in 18 European countries) dropped 0.9 per cent to 397.59 at the opening of markets in London, marking the first drop in four days of international trade.

The FTSE 100 tumbled 1.17 per cent.

The decline was sharp in France and Germany, with the CAC 40 falling 1.18 per cent in Paris, and the DAX 30 falling more than 1.3 per cent in Frankfurt.

Europe’s focus is on Greece.

Talks to reach a solution to the two-month impasse since the Greek government’s demand that the European Central Bank (ECB) and International Monetary Fund (IMF) ease austerity measures and restructure Athens’ debt repayment schedule have dragged on with little progress.

On Tuesday, Athens repaid $860 million to the IMF, avoiding default and keeping alive hopes that it could yet alleviate its liquidity (cash) crunch.

Economic experts have for months said Greece could run out of money this summer if it does not reach a compromise on economic reforms with the ECB and IMF.

A deal would give Athens access to an additional $8 billion to help it pay off some of its debts and keep the public sector functioning.

Greek Finance Minister Yanis Varoufakis in Brussels on Monday said that he was optimistic a deal could be reached soon, but his eurozone counterparts said many substantial issues had still not been resolved.

Varoufakis is part of the new leftist government that was swept to power in snap elections in January largely riding a wave of popular discontent against the austerity measures that were set as preconditions for the bailout agreement with the EU since 2009.

On Tuesday, Athens said it was rehiring thousands of public sector workers – street cleaners – despite austerity measures enforced by the previous government.

The BRICS POST with inputs from Agencies