Greek referendum causing havoc

By Staff | November 1, 2011 | Last updated on November 1, 2011
1 min read

Tuesday saw global markets take a dive on fears the proposed Greek referendum will lead to a messy debt default.

Germany’s Dax-30 index was down 6% by early afternoon, while French shares lost 5% and the euro 1.6%. US markets opened lower with the Dow Jones Industrial Average sinking 2.2%.

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European bank shares were particulatly hard hit: Société Générale lost 17%, while Intesa Sanpaolo and BNP Paribas fell 14%. The Greek prime minister’s decision to call a national referendum on the bailout package opens up the possibility that the deal worked out last week could collaspe.

“A No vote could throw the process back into the air and possibly lead to a messy Greek default …. At the least, it delivers many more weeks of uncertainty,” explains an article in the Financial Times.

Exacerbating the markets’ woes are worries about a slowdown in Chinese manufacturing.

China’s official purchasing managers’ index fell from 51.2 in September to 50.4 in October, a result of Beijing’s tightening mneasures and trouble abroad.