Stock markets suffer over Greece

Published:  24 May at 6 PM

Stock markets have sharply dropped ahead of a European Union meeting, while concerns rise over Greece's potential exit from the euro. Shares dropped after a report cited ex Greek PM Lucas Papademos saying that Greece’s government might be preparing to leave the euro.

Italian markets closed down by 3.7%, while Spanish markets dropped by 3.3%. London, Frankfurt, and Paris fell by over 2%. The euro fell to a twenty-two month low against the US dollar.

The euro fell below $1.26 in its first time since August of 2010, falling by over 1.5 cents to $1.2571. The Dow Jones in New York ended down 6.7 points.

Germany's central bank also said Greece’s developments were "highly alarming". The Bundesbank mentioned in its monthly report that Greece was threatening to not apply the agreed consolidation measures and economic reforms.

This scenario may create great challenges for Germany as the rest of the eurozone, but the situation could be "manageable” with prudent crisis management, said the bank.

Greece will be a likely discussion topic at a gathering of European Union leaders which opened in Brussels last Wednesday evening. This will be the first time that newly-elected French President, Francois Hollande, will be attending an EU meeting of this kind.