9 May 2012

Greece crisis drags world share markets lower

1:35 pm on 9 May 2012

The euro, oil and stocks have fallen as worries intensify that Greece could reject the bailout that saved it from bankruptcy.

Voters in weekend elections in both Greece and France rejected austerity measures that markets have seen as the way out of Europe's debt crisis.

Alexis Tsipras, the leader of Greece's Left Coalition party, began efforts to form a government by rejecting terms tied to the country's receipt of bailout funds and threatening to nationalize banks.

The head of a centrist conservative party, which won the most votes Sunday, said he would not back a minority government that renounced the bailout, making repeat elections in a few weeks increasingly likely.

If Greece does not stick to the aid package terms, it could run out of money as soon as next month, officials estimate.

A broad measure of Greek stocks dropped 3.6% to close at its lowest level in almost 20 years, and France's CAC 40 lost 2.8%.

US stocks closed lower, but far off their session lows.

The Dow Jones industrial average dropped 76.75 points (0.59%) to 12,931.78.

The Nasdaq Composite Index dropped 11.49 points (0.39%) to 2,946.27.

Oil prices fell for a fifth straight session, marking the largest five-day decline since October. Brent crude settled down 0.4% at $US112.73 and US crude fell 1% to $97.01.

The euro fell for a seventh straight session, down 0.3% at $US1.3010, off the day's low of $US1.2981. The single currency traded below the key technical level of $US1.30 for a second straight session.