World markets see little change as Greece awaits latest bailout
AP and AFP
March 13, 2012, 12:08 am TWN
LONDON/HONG KONG--Markets were steady Monday ahead of a meeting of European finance ministers that is expected to pave the way for a second massive bailout for Greece that will prevent the debt-ridden country's imminent bankruptcy.
Ministers from the 17 countries that use the euro are meeting later and Greece will again be at the top of the agenda. After last week's broadly successful bond swap with its private creditors, Greece will hope that it has met the conditions its partners in the eurozone attached before they finally rubber-stamp the country's 130-billion-euro (US$171.48 billion) financial rescue.
Though the bond swap, which shaves some 105 billion euros (US$138 billion) off Greece's 368-billion-euro (US$485 billion) debt mountain, is likely to give the country some breathing room to enact another round of austerity and reform measures, many analysts think the country's debt remains unsustainable.
The country, which has seen its economic output shrink by around a fifth since the financial crisis began in 2008, also faces elections sometime over the next two months and there are some concerns in the markets that the outcome may dent the zeal for austerity and reform.
Sentiment was also tempered by news that Greece's debt-reduction deal with private creditors could cause losses for banks after the International Swaps and Derivatives Association (ISDA), the private organization that rules on such cases, ruled that a “restructuring credit event” occurred.
That means Greece's debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds. But the ISDA said overall payouts will be significantly below the US$3.2 billion in net outstanding credit default swap contracts linked to Greece. The exact level of payouts will be determined on March 19.
In Europe, the FTSE 100 index of leading British shares was flat at 5,886 while Germany's DAX rose 0.3 percent to 6,903. The CAC-40 in France was 0.1 percent higher at 3,450.
Wall Street was poised for a steady opening with Dow futures and the broader S&P 500 futures broadly unchanged.
Asian shares fell on Monday as better-than-expected U.S. jobs data was overshadowed by figures indicating a sharp slowdown in the Chinese economy.
Tokyo closed 0.4 percent lower, giving up 39.88 points to 9,889.86, Sydney was off 0.36 percent, or 15.3 points, at 4,196.7 and Seoul shed 0.78 percent, or 15.8 points, to 2,002.5.