Euro slips, sentiment sours after Greek vote

Mon Jun 18, 2012 4:49pm EDT
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By Herbert Lash

NEW YORK (Reuters) - The euro fell and global equity markets were mixed on Monday after initial enthusiasm over a weekend victory for pro-bailout parties in Greek elections gave way to worry about the nagging debt crisis still facing the euro zone.

Market reaction was choppy as voters gave parties supporting Greece's economic bail-out a majority on Sunday, easing fears of a break-up in the euro zone and helping risk assets to rally, at least initially.

Safe-haven government debt gained in light volume as investors shrugged off Greece's election results and awaited a two-day meeting of Federal Reserve policymakers that starts on Tuesday for potential signs of new stimulus measures.

Investors also awaited news from Mexico, where world leaders at a G20 summit were set to put pressure on the euro zone to outline a lasting strategy to save the single currency.

Wall Street opened lower but rebounded after a senior official with Greece's conservative New Democracy party said parties that broadly back the country's international bailout will form a coalition government on Tuesday.

Greece will accelerate and widen a privatization program, while planned austerity cuts will be implemented over four years instead of two, said the source, who spoke on the condition of anonymity.

The euro fell from a one-month high of $1.2747 hit in Asia as it came under pressure on reported selling by Asian sovereign investors. It was down 0.5 percent at $1.2576.

The Dow Jones industrial average .DJI closed down 25.35 points, or 0.20 percent, at 12,741.82. The Standard & Poor's 500 Index .SPX rose 1.94 points, or 0.14 percent, at 1,344.78. The Nasdaq Composite Index .IXIC gained 22.53 points, or 0.78 percent, at 2,895.33.   Continued...

Traders talk in front of computer boards at the stock exchange in Madrid June 15, 2012. REUTERS/Andrea Comas