Shares dive amid fears Greek crisis will spread here
GLOBAL stock and currency markets buckled under fears that the massive financial bailout of Greece won't be enough to prevent a crisis spreading across Europe, including Ireland.
The euro hit its lowest level since April last year as the investors became concerned that the European Union's latest €110bn effort to save the Greek economy may prove to be insufficient.
The currency tumbled as Greek government workers staged widespread strikes demonstrators occupied the Acropolis, protesting against €30bn of additional wage cuts and tax increases.
Prime Minister George Papandreou has called on the nation to endure more sacrifices in return for the bailout from the EU and the International Monetary Fund.
And European stocks plummeted following concern the Greek debt crisis was spreading to Spain.
The Stoxx Europe 600 Index, which tracks the continent's 600 biggest companies, slid 2.9c as 13 companies fell for every one that rose. Investors outlined that the markets were currently in a period of "volatility" as uncertainty reigns.
"We believe the Greek crisis is only the tip of the iceberg," one investor said. "The debt sustainability problems in other Eurozone countries are equally serious, while the macro- economic limitations are often more severe than in Greece."
Meanwhile, Minister for Finance Brian Lenihan revealed that Ireland would provide just under €500m in the first year of a three-year bilateral loan package to Greece.
The total amount in Irish loans to the Greek government through the European Commission would be up to €1.312bn, he said.
The minister said that there was a provision in the agreement on the loan package that the member states were not to be at a loss.
The loans would "not impact on member states' deficits," Mr Lenihan said. "Ireland is lending money to Greece at a profit for Ireland, or at worst on a repayment basis," he added.
In a statement, Fine Gael finance spokesman Richard Bruton said the action taken so far "has not stemmed a crisis of confidence in the ability of the Eurozone to handle the internal imbalances between members".
"Countries like Greece and Ireland will only be in a position to regain fiscal health if they can export their way back to growth."