Euro, shares down on delays in Greek bailout

Thu Feb 16, 2012 8:23am EST
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By Richard Hubbard

LONDON (Reuters) - European shares fell and the euro eased to a 3-week low on Thursday as a delay in deciding on a crucial bailout for Greece unnerved investors and halted the rally for riskier assets like equities that has marked the start of 2012.

U.S. stock index futures also pointed to a lower open with the warning by ratings agency Moody's of a possible downgrade of several major Wall St banks adding to the worries over Greece.

Moody's said it may cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone debt crisis was spreading. Among the banks listed were Morgan Stanley (MS.N: Quote), Goldman Sachs Group Inc (GS.N: Quote) and Bank of America Corp (BAC.N: Quote).

But it was fear that time is running out for Greece to avoid a potentially chaotic default that weighed on most markets, sending riskier assets like shares and commodities lower and lifting the U.S. dollar

Greece has said it must initiate a debt swap with its private bondholders by Friday to meet a March 20 deadline to repay 14.5 billion euros in debt.

Even if a deal is agreed on Monday, several sources have told Reuters euro zone finance officials are examining ways of delaying part or possibly all of the second bailout program, while still avoiding a disorderly default.

The market's confidence that negotiations would reach a successful conclusion has been undermined by growing public acrimony between Athens and its euro zone partners, led by Germany.

"Let's hope that this is sort of the final death throes of the negotiations and that the deal is about to be done," said Chris Turner, Head of FX Strategy at ING.   Continued...

Traders work at their desks at the Frankfurt stock exchange February 1, 2012. REUTERS/Alex Domanski