Oct 15, 2014 9:01 AM
Greek markets nosedive amid political uncertainty
The Associated Press
ATHENS, Greece (AP) Concerns that the Greek government could collapse next year, putting its bailout program in danger, caused a massive sell-off in the country's stock and bond markets on Wednesday, with the main stock index down 9.8 percent.
The plunge follows a loss of 5.7 percent the previous day and brings the stock market to its lowest level in 14 months. Yields on Greece's 10-year bonds also rose sharply, to 7.71 percent up 1.09 percentage points on the day, a sign investors are more worried about default.
The losses come amid a wider drop in global markets, but were exacerbated by a survey on Monday showing the opposition anti-bailout Syriza party had a widening lead over the governing conservatives.
The government will rely on opposition support in February to elect a new president. Without it, the government would collapse. The prospect worries investors because Syriza has long said it wants to overhaul Greece's bailout agreement, the package of loans that is propping it up financially.
Conservative Prime Minister Antonis Samaras, who is pressing reluctant rescue lenders for an early exit from Greece's six-year bailout program, was to chair a cabinet meeting on the economy later in the day.
Samaras' Socialist coalition partner, Deputy Prime Minister Evangelos Venizelos, said "doubt over political stability" posed the biggest threat to the country's recovery.
"We can see just how fragile the situation is ... and the danger of turning pretty domestic political squabbles into reasons for the markets to turn against us," Venizelos said.
"What we are seeing today, is scenes from the future that must be avoided."
Syriza is arguing Greece's economy cannot recover unless a substantial portion of money owed to bailout creditors is canceled. It describes the dramatic increase in poverty and unemployment after years of austerity measures as a "humanitarian crisis."