Markets rattled as fears grow over Greek bailout
Jitters spread through financial markets yesterday as Greece appeared to be no closer to securing another round of vital funding.
The bailout cash is needed to stop the region defaulting next month, but with no immediate end in sight, fears have been rekindled that Europe's debt crisis will spread to bigger countries like Italy.
As stocks and the euro fell sharply yesterday, borrowing rates rose for Italy and Spain - an indication of investor concern that they will eventually be dragged back into the crisis that had shown some signs of easing over the past couple of months.
The pressure on the two countries had eased substantially in recent weeks, primarily because the European Central Bank offered super-cheap, long-term loans to banks.
But new jitters were creeping into markets as worries grew about a default in Greece next month. The country has yet to clinch deals for a bailout worth €130bn (£107bn) and an accompanying €100bn (£82bn) debt writedown by private bondholders.
Jean-Claude Juncker, who heads eurozone finance meetings, promised more clarity on Monday, when he said decisions will be made.
Over the past few days, doubts grew that the bailout deal may be unravelling and yesterday, relations between Greece and its partners in the eurozone hit a new low.
Greek Finance Minister, Evangelos Venizolos, said there were some in the eurozone who wanted Greece out of the euro, while his counterpart in Germany, Wolfgang Schaeuble, even urged the postponement of elections in Greece, which are due in April.
"(The) back and forth between Greek politicians and EU policymakers had all the hallmarks of an unedifying playground spat, with accusations and insults flying thick and fast," said Michael Hewson, markets analyst at CMC Markets.
"Unfortunately, there will be no winners or losers in this particular little saga as Europe gives the impression of gearing up to cut Greece loose", unless they bend to demands for new measures "to sate new concerns", he said.
Meanwhile, the EU has been trying to defuse the row.
Jose Manuel Barroso, the president of the European Commission, struck a conciliatory tone.
"I would like to salute the courage of the Greek government and the Greek people in these very challenging times and I would hope that the members of the European Union will accept the commitments given by Greece," he said.