US markets hit year-low, as Greece is warned it will have no more concessions
US stocks sank to a one-year low as fears rose that Greece’s worsening financial woes and a likely default were triggering a second global banking crisis.
By Bruno Waterfield
03 Oct 2011
Shares in Bank of America, Citi and Morgan Stanley fell to their lowest levels since March 2009 after the Franco-Belgian bank Dexia looked like it might be the first lending casualty from the Greek crisis.
American banks also saw the insurance taken against their debt spike higher with credit default swaps jumping 8pc to 19pc.
Eurozone finance ministers have told Greece that the debt-crippled nation will be granted no further concessions despite Athens’ admission that it will miss its deficit reduction targets.
The warning set up a fresh showdown between the “troika” of the European Union (EU), European Central Bank and International Monetary Fund (IMF), and the Greek government over the payment of a vital €8bn (£6.8bn) bail-out instalment, and sparked a sharp sell-off in European and global markets.
Evangelos Venizelos, the Greek finance minister, claimed that the “troika” had accepted that Greece would fall €4.3bn short of its debt target because austerity had plunged the country into a deeper recession than expected. But eurozone ministers, while conceding that Greece is struggling with recession, made it clear they will not concede on EU-IMF demands for deeper cuts to Greek spending before handing over the next rescue tranche.