Wednesday, May 16, 2012

20120516 0956 Global Market Related News.

Asian Stocks Fall as Greek Talks Fail, Heightening Euro Concern (Source: Bloomberg)
Asian stocks fell as talks to form a new government in Greece failed, increasing concern the country will be forced to leave the single European currency and derail efforts to contain the region’s debt crisis. The MSCI Asia Pacific Index (MXAP) slid 0.6 percent to 116.50 as of 9:05 a.m. in Tokyo. Almost three stocks declined for each that rose on the measure, which is poised to match its longest losing streak this year. The gauge is about 1 percent away from closing 10 percent below this year’s high on Feb. 29, a level some investors call a correction.

Japan Stocks Fall on Greek Risk; Banks Rise on Forecasts (Source: Bloomberg)
May 16 (Bloomberg) -- Japanese stocks fell, with the Topix Index declining a sixth day, as Greece decided to hold another election after failing to form a new government, raising concern the debt-stricken nation will exit the euro. Losses were limited as banks gained on improved profit outlooks. Konica Minolta Holdings Inc. (4902), a maker of photo films that gets 28 percent of its sales in Europe, lost 2.1 percent. Daikin Industries Ltd. (6367), an air-conditioning equipment manufacturer, slid 1.1 percent after data showed Japan’s machinery orders fell in March. Mizuho Financial Group Inc. (8411) led banks higher after its net-income forecast beat estimates. The Nikkei 225 Stock Average (NKY) lost 0.5 percent to 8,860.11 as of 9:19 a.m. in Tokyo, with more than two stocks dropping for each that rose. Trading volume was 8 percent below the 30-day average. The broader Topix Index fell 0.4 percent to 744.18.
“Uncertainty is what the stock market dislikes the most,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Investors will start worrying about Portugal and Spain with speculation rising about Greek’s exit from the euro.”

Japan Stock Futures Fall as Greek Impasse Talks Fail (Source: Bloomberg)
Japanese and Australian stock futures fell as talks to form a new government in Greece failed, increasing concern the country will be forced to leave the single European currency and derail efforts to contain the region’s debt crisis. American depositary receipts of Sony Corp. (6758), Japan’s largest consumer electronics exporter that gets a fifth of its sales in Europe, fell 1.1 percent from the closing share price in Tokyo. Mizuho Financial Group Inc. (8411), Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc., the three biggest banks in Japan, may be active after forecasting profit that exceeded analysts’ estimates as lending rebounds. ADRs of BHP Billiton Ltd., the world’s No. 1 mining company, declined 2.3 percent as metals prices dropped.
Futures on Japan’s Nikkei 225 Stock Average expiring in June closed at 8,845 in Chicago yesterday, down from 8,910 in Osaka, Japan. They were bid in the pre-market at 8,860 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index dropped 0.7 percent today. New Zealand’s NZX 50 Index slid 0.2 percent in Wellington. “As the pressure builds in Europe, you need to see another mini crisis before policy makers will step in, and we’re not there yet,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “Markets and economies in Asia are at the mercy of the export story.”

Dow Falls to Four-Month Low as Greece Overshadows Economy (Source: Bloomberg)
The Dow Jones Industrial Average (INDU) fell to an almost four-month low as Greece’s failure to form a new government offset better-than-estimated American economic data. Commodity (SPXL1) shares tumbled as the Dollar Index extended its longest rally ever, reducing the appeal of raw materials. Avon Products Inc. (AVP) slumped 11 percent as Coty Inc. withdrew its $10.7 billion offer for the biggest door-to-door cosmetics seller. Home Depot Inc. (HD), the largest U.S. home-improvement retailer, slid 2.4 percent as it forecast slowing sales gains. Lennar Corp. (LEN) and D.R. Horton Inc. (DHI) jumped at least 2.5 percent as homebuilder confidence climbed to the highest level since 2007. The Standard & Poor’s 500 Index fell 0.6 percent to 1,330.66 at 4 p.m. New York time, dropping 2 percent in three days. The Dow lost 63.35 points, or 0.5 percent, to 12,632, the lowest since Jan. 19. About 7.3 billion shares changed hands on U.S. exchanges, or 9 percent above the three-month average.
“It’s fear of European drama,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management. His firm oversees $160 billion. “It seems obvious that leaving the euro would be a disaster for Greece and very costly to its economy. Yet they seem to be on a path where that could happen. We’ve had some good U.S. economic data, but people are afraid to hold equities. It’s extremely frustrating.”

Emerging-Market Stocks Drop to Four-Month Low on Greek Elections (Source: Bloomberg)
Emerging-market stocks fell to a four-month low as Greek Pasok party leader Evangelos Venizelos said the country will hold elections, deepening concern Europe’s debt crisis will worsen and curbing demand for riskier assets. The MSCI Emerging Markets Index (MXEF) lost 0.6 percent to 946.10, the lowest level since Jan. 9. Brazil’s Bovespa index fell, erasing this year’s gain, while Mexico’s IPC benchmark slipped 1.1 percent. MRV Engenharia & Participacoes SA (MRVE3), a home developer in Brazil, tumbled 15 percent after saying first-quarter net income declined 24 percent. A second election in less than two months threatens to extend the political deadlock that has left Greece without a government since the last vote on May 6, and fuels concern that the country may exit the euro. Presidency official Costas Bitsios said a meeting will be held tomorrow to form a caretaker government to run the country.
“The more this political impasse lasts, the bigger are the chances of Greece leaving the euro zone,” Luciano Rostagno, chief strategist at WestLB AG’s Brazilian unit in Sao Paulo, said by phone. “Nobody knows how that would affect big countries that are also in trouble, such as Spain. That’s pushing risk aversion to high levels, making investors turn away from equities.”

European Stocks Retreat as Greece Will Hold New Election (Source: Bloomberg)
European stocks dropped for a second day, pushing the Stoxx Europe 600 Index to its lowest level since December, as Greece called a new election after the country’s politicians failed to form a government. Banks (SXXP) posted the biggest contribution to the Stoxx 600’s decline. Julius Baer Group Ltd. (BAER) plunged 6.1 percent, its biggest slide in almost eight months, as revenue from assets under management fell in the first four months of the year. The Stoxx 600 retreated 0.7 percent to 245.76 at the close in London, extending its drop from this year’s peak on March 16 to 9.8 percent. The gauge swung between gains and losses at least nine times earlier today. The Stoxx 600 slid to its lowest level since Dec. 30.
“Equities look cheap, but we all know why,” Didier Saint- Georges, a member of the investment committee at Carmignac Gestion, which oversees about 50 billion euros ($64 billion), said at a presentation in London today. “Valuations are not necessarily pointing to any clear direction. For Europe, you just don’t need growth, but also very profound adjustments both fiscal and external, and that won’t happen quickly.”

Aussie Near 2012 Low Amid Concern Greece May Leave Euro (Source: Bloomberg)
Australia’s dollar traded close to its weakest level this year as Greece’s failure to form a new government spurred speculation it may leave the euro area, sapping demand for riskier assets. The so-called Aussie was near a four-month low against the yen as Asian stocks fell for a sixth-straight day, extending a global equities rout. The New Zealand dollar maintained three days of losses after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said whole-milk powder prices continued their slide, falling to the lowest level in more than 2 1/2 years. “It’s just a general bout of risk aversion around the globe,” said Derek Mumford, a director in Sydney at Rochford Capital, a currency risk management company. “It’s not just Greece, it’s the whole European situation. The Aussie is certainly under pressure.”
Australia’s dollar traded at 99.46 U.S. cents as of 10:53 a.m. in Sydney from 99.37 in New York yesterday, when it slid as low as 99.22, the weakest since Dec. 20. The currency bought 79.94 yen from 79.67 yesterday when it touched 79.39, the lowest since Jan. 17. The New Zealand dollar bought 76.92 U.S. cents, having declined 0.9 percent to 76.93 cents yesterday. It was at 61.83 yen from 61.68.

Asia-Pacific Bond Risk Rises, Credit-Default Swap Prices Show (Source: Bloomberg)
The cost of insuring Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit-default swaps. The Markit iTraxx Australia index climbed 7 basis points to 194 basis points as of 10:01 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The gauge is set for its highest close since Dec. 20, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 5 basis points to 192.5 as of 8:08 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is poised to close at the highest level since Jan. 19, CMA data show. The Markit iTraxx Japan index increased 4 basis points to 212 as of 9:01 a.m. in Tokyo, according to Deutsche Bank AG prices. The benchmark is on course for its highest close since Oct. 7, according to CMA prices.

Facebook Increases IPO Price Range to $34-$38 a Share (Source: Bloomberg)
Facebook Inc. (FB) boosted the price range on its initial public offering to seek as much as $12.8 billion, signaling that Chief Executive Officer Mark Zuckerberg expects demand for the social network to withstand recent market turmoil. The new range is $34 to $38 a share, a regulatory filing today shows, indicating a market value of as much as $104.2 billion. That would make Facebook, co-founded in 2004 by Zuckerberg, worth more than Citigroup Inc. (C) and McDonald’s Corp. Facebook, which has spent more than a week pitching the IPO to investors across the U.S., raised the range even after the Standard & Poor’s 500 Index yesterday slumped to the lowest level since February. That may spell disappointment for investors if the slump persists, said Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp.
“They get more money upfront if they can make it go, but if the enthusiasm is weak out of the gate, it makes it that much more difficult for the company going forward,” said McCain, who helps oversee more than $20 billion for the Cleveland-based bank. “You would think they would be a little more cautious.”

Treasury Yield Is 10 Basis Points From Low on Greece (Source: Bloomberg)
Treasury 10-year yields were 10 basis points from the record low after German Finance Minister Wolfgang Schaeuble said a Greek election will be a referendum on whether the country retains the euro. Seven-year yields fell to the least ever on the first two days of this week. Europe’s fiscal crisis and Greece’s struggle to combat a recession while staying in the currency union increased demand for the relative safety of U.S. debt. The Standard & Poor’s 500 Index slid to the lowest level since February. “Bond sentiment is very strong,” said Tsutomu Komiya, who helps oversee the equivalent of $111 billion as an investor in Tokyo at Daiwa Asset Management Co., a unit of Japan’s second- biggest brokerage. “Stock market sentiment has collapsed. This will continue. The flight to quality isn’t over.”
Benchmark 10-year yields were little changed at 1.77 percent as of 9:28 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.75 percent security due in May 2022 was 99 27/32. The record low was 1.67 percent set Sept. 23. Seven-year notes yielded 1.19 percent, versus the all-time low of 1.1679 percent.

Euro Trades Near 4-Month Low With No Greek Government (Source: Bloomberg)
The euro was less than 0.1 percent from the lowest level in almost four months after Greece’s political leaders failed to form a ruling coalition, deepening speculation the country will have to leave the currency bloc. Demand for the euro was damped before Greek leaders seek agreement today on an interim government that will schedule new elections. The U.S. dollar traded 0.1 percent from its strongest this year versus its Australian peer as Asian stocks extended a global equity rout and ahead of the release of minutes from the Federal Reserve’s April meeting. The yen weakened versus most of its 16 major peers after a report showed Japan’s machinery orders fell in March. “Risk off has done a lot of damage to the euro,” said Gavin Stacey, chief interest-rate strategist at Barclays Capital in Sydney. “If we are to see Greece leave the euro, I suspect the initial reaction will be even more catastrophic.”
The 17-nation euro was little changed at $1.2731 as of 9:30 a.m. in Tokyo from $1.2729 yesterday, when it touched $1.2722, the lowest since Jan. 17. The shared currency rose 0.2 percent to 102.27 yen. The greenback added 0.2 percent to 80.33 yen. It fetched 99.33 cents per Australian dollar after reaching 99.22 cents yesterday, the strongest since Dec. 20.

FOREX-Euro dips to 4-month low as Greek impasse fans exit worry
TOKYO, May 15 (Reuters) - The euro slipped to a four-month low against the dollar as a political stalemate in Greece stoked fear the country may renege on bailout pledges made to international creditors and exit the currency bloc.  
"Another election is likely to make fiscal rebuilding less likely," Daisuke Karakama, market economist at Mizuho Corporate Bank, said.  

U.S. Retail Sales Cool After Warm-Weather Spree: Economy (Source: Bloomberg)
Retail sales rose in April at the slowest pace of the year as Americans took a break from a shopping spree induced by unseasonably warm weather in prior months and an earlier Easter holiday. The 0.1 percent gain followed a 0.7 percent increase in March, Commerce Department figures showed today in Washington. The April advance matched the median forecast in a Bloomberg News survey. Sales of clothing declined, while purchases excluding cars, building materials and service stations -- the category used to calculate gross domestic product -- rose more than forecast. Other reports today showed manufacturing in the New York region accelerated more than projected, and confidence among U.S. homebuilders jumped to a five-year high.
“Consumers overall are still pretty much engaged,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, the most-accurate forecaster of retail sales in the two years through April, according to data compiled by Bloomberg News. “Manufacturing is still a solid contributor to growth. It is growing with the pace of demand.”

International Demand for U.S. Assets Rises (Source: Bloomberg)
International demand for U.S. financial assets rose in March as investors continued to seek safety from the debt crisis in Europe. Net buying of long-term equities, notes and bonds totaled $36.2 billion during the month, compared with net purchases of $10.1 billion in February, the Treasury Department said today in Washington. Economists surveyed by Bloomberg News projected net buying of $32.5 billion of long-term assets, according to the median estimate. “The continued buoyancy in foreign demand for U.S. Treasuries is consistent with the preeminent safe-haven appeal of these securities to global investors,” Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said. “We expect the souring in global risk sentiment in recent months, as concerns about the deteriorating European debt crisis and slowing global growth momentum intensifies, to continue to bolster foreign investors’ appetite for U.S. Treasury securities.”
The report showed that net foreign purchases of U.S. Treasuries totaled $20.5 billion in March, compared with net buying of $15.4 billion the month before. U.S. assets maintained their attraction as the European debt crisis mounted on concerns that Greece may leave the euro area. Greece’s impasse over forming a government has raised the possibility of another election to be held as early as next month, threatening the implementation of austerity pledges under the international financial rescue plan.

Farmland Values Advance in U.S. as Crop-Price Spur Income (Source: Bloomberg)
Farmland values surged during the first quarter from Kansas to Indiana as gains in crop prices during the past two years bolster income, according to a survey of lenders by regional Federal Reserve banks. Midwest farmers in a five-state region saw an increase of 19 percent as of April 1 from a year earlier, including a 27 percent increase in Iowa, the largest U.S. corn and soybean grower, the Chicago Fed said in a report today. Great Plains states posted a 25 percent increase, led by a 39 percent jump in Nebraska and 24 percent in Kansas, the Kansas City Fed report showed. Corn and soybean futures last year reached the highest averages ever, while wheat was 34 percent higher than in 2009. Net farm income for domestic growers will reach $91.7 billion this year, second only to last year’s $98.1 billion, the U.S. Department of Agriculture said on Feb. 13.
“We have had two years of exceptional farm income, historically low interest rates and a lack of alternative investments driving farmland prices,” Mike Walsten, the editor of Land Owner Newsletter, a unit of Pro Farmer publications, said by telephone from Cedar Falls, Iowa. “Farm income in 2011 was $30 billion higher than the 10-year average, and that’s what’s increasing farmer purchases.”

U.S. Retail Sales Cool After Warm-Weather Spree: Economy (Source: Bloomberg)
Retail sales rose in April at the slowest pace of the year as Americans took a break from a shopping spree induced by unseasonably warm weather in prior months and an earlier Easter holiday. The 0.1 percent gain followed a 0.7 percent increase in March, Commerce Department figures showed today in Washington. The April advance matched the median forecast in a Bloomberg News survey. Sales of clothing declined, while purchases excluding cars, building materials and service stations -- the category used to calculate gross domestic product -- rose more than forecast. Other reports today showed manufacturing in the New York region accelerated more than projected, and confidence among U.S. homebuilders jumped to a five-year high.
“Consumers overall are still pretty much engaged,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, the most-accurate forecaster of retail sales in the two years through April, according to data compiled by Bloomberg News. “Manufacturing is still a solid contributor to growth. It is growing with the pace of demand.”

Japan’s Growth Seen Peaking as BOJ Pressed to Stimulate (Source: Bloomberg)
Japan’s economic growth probably peaked in the first quarter and analysts forecast the pace of expansion will halve by year-end as the boost from earthquake reconstruction fades. Gross domestic product rose an annualized 3.5 percent, compared with a 0.7 percent contraction in the final three months of 2011, according to the median estimate of 27 economists surveyed by Bloomberg News. The Cabinet Office will give the number at 8:50 a.m. in Tokyo tomorrow. Persistent deflation and the yen’s 5 percent climb against the dollar since mid-March may encourage politicians to keep pressing the Bank of Japan to add more stimulus to support growth in the world’s third-biggest economy. As the boost from rebuilding wanes, the nation will increasingly depend on exports just as Europe’s sovereign-debt crisis and a slowdown in China cloud the outlook for global demand.
“The pace of a slowdown later this year will depend on how the European debt crisis will affect the yen and exports,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. in Tokyo and a former BOJ official. “The Bank of Japan (8301) may have little choice but to ease more -- once every three months.”

Japanese Machinery Orders Fall 2.8% From Previous Month (Source: Bloomberg)
Japan’s machinery orders fell less than economists forecast in March, as earthquake reconstruction helped to support the nation’s growth. Bookings decreased 2.8 percent from the previous month, when they rose by the same amount, a Cabinet Office report showed in Tokyo today. The median estimate of 29 economists surveyed by Bloomberg News was for a 3.5 percent decline. Orders can swing between gains and declines depending on the timing of major projects. Japan’s government may report tomorrow that the world’s third-biggest economy returned to growth in the first quarter after shrinking in the final three months of last year, a Bloomberg News survey of analysts shows. Europe’s sovereign-debt crisis and gains by the yen against the dollar may limit the full-year expansion by capping exports.
“The recovery in business investment is good news, but it’s unlikely to be strong enough to help accelerate growth,” said Hidenobu Tokuda, an economist at Mizuho Research Institute Ltd. in Tokyo. “Companies are reluctant to increase spending because of the strong yen.”

South Korea Adds Workers as Unemployment Rate Unchanged at 3.4% (Source: Bloomberg)
South Korea added workers last month and the unemployment rate held at two-month low as demand increased for jobs in health, social welfare and education. The rate was 3.4 percent in April, Statistics Korea said today in Gwacheon, south of Seoul, matching the median estimate in a Bloomberg News survey of 12 economists. The number of employed people increased 1.9 percent to 24.76 million last month from a year earlier. South Korea’s gross domestic product expanded at the fastest pace in a year last quarter, mostly boosted by government spending and investments by semiconductor chipmakers. Now, the sovereign-debt crisis in Europe threatens to curb the nation’s exports. “We expect Korea’s GDP growth to be sub-trend this year as a whole, which suggests that the unemployment rate will drift upwards,” Sukhy Ubhi, an economist at Capital Economics Ltd. in London, said before the release. “Renewed concerns over the euro-zone debt crisis suggest that business sentiment may already be turning for the worse.”
The won declined 0.4 percent to 1,154 per dollar in Seoul yesterday, according to data compiled by Bloomberg. The benchmark Kospi stock index fell 0.8 percent. The Bank of Korea is likely to keep the key interest rate unchanged this year, setting a record for the longest stretch that the benchmark has stayed on hold, an adviser to the government said last week.

Italy Economy Contracts Most in Three Years on Recession (Source: Bloomberg)
Italy’s economy contracted for a third quarter in the three months through March as the nation’s recession deepened amid an intensifying euro-area debt crisis. Gross domestic product declined 0.8 percent, the most in three years, Rome-based national statistics institute Istat said in a preliminary report today. The contraction was more than the median forecast of 0.7 percent in a survey of 14 economists by Bloomberg News. GDP fell 1.3 percent from a year earlier. Prime Minister Mario Monti’s government is implementing 20 billion euros ($26 billion) in austerity measures that helped push Italy into its fourth recession since 2001 in the fourth quarter of last year. Monti is now lobbying European leaders to craft policies to boost economic growth without widening budget deficits as spending cuts and the debt crisis cloud prospects for euro-region expansion.
“Today’s GDP outcome is particularly disappointing,” UniCredit SpA economists including Milan-based Chiara Corsa wrote in a note to investors today. “It seems that the picture won’t improve substantially in the second quarter of the year.”

Greek Leaders Meet on Election After European Stocks Drop (Source: Bloomberg)
Greek leaders seek agreement today on an interim government that will schedule new elections as early as June 10, after government-formation talks collapsed amid concern the country will abandon the euro common currency. “The country is once again headed to elections in a few days under adverse conditions,” said Evangelos Venizelos, the head of the socialist Pasok party. “The Greek people told us they didn’t want elections but a coalition government, that they want Greece in the euro.” The new voting will follow inconclusive May 6 elections that pushed a political party opposed to Greece’s international bailout into second place. Public opinion polls say that party, Syriza, may come in first next time, complicating Greece’s efforts to avoid running out of cash by early July.
President Karolos Papoulias failed to broker a governing coalition in meetings yesterday with Venizelos and other party leaders in Athens. The euro plummeted to an almost four-month low, while the Stoxx Europe 600 Index fell to its lowest level since December.

Greek President Told Banks Anxious as Deposits Pulled (Source: Bloomberg)
Greek President Karolos Papoulias was told by the central bank chief this week that financial institutions are becoming anxious about their prospects as Greeks pull out cash after inconclusive May 6 elections. “Provopoulos told me that of course there’s no panic but there’s great fear which can evolve into panic,” according to a transcript of the president’s meeting with party leaders on May 14 that was published yesterday. Central bank head George Provopoulos told Papoulias that Greeks have withdrawn as much as 700 million euros ($893 million) and the situation could worsen, according to the transcript. Greece’s future in the euro has been thrown into doubt by the failure of political leaders to agree on a new government after the vote, forcing the president to call new elections yesterday. The danger is that the next vote will again fail to produce an administration capable of pushing through the austerity measures needed to keep the country in the euro.
Greece’s benchmark ASE Index fell to its lowest since 1992 yesterday.

Greece Makes Repayment on 435M Euro Bond Coming Due Today (Source: Bloomberg)
Greece is to repay 435 million euros ($556 million) of bonds falling due today as the nation faces new elections after leaders failed to form a government. Greece will pay the principal and interest on foreign law notes which weren’t tendered into the country’s debt restructuring, the Athens-based Finance Ministry said in an e- mailed statement. The repayment won’t prejudice future decisions on other untendered bonds, the ministry said. Greece swapped about 200 billion euros of its sovereign debt in March and April in the world’s biggest debt restructuring, forcing holders of notes issued under domestic law to accept a 53.5 percent loss on the face value of the bonds. The May 15 redemption is the first out of about 6.4 billion euros of notes issued under foreign law that investors refused to tender into the swap.
Prime Minister Lucas Papademos called elections after completing the restructuring and securing a 130 billion-euro Greek bailout from the European Union and International Monetary Fund, the country’s second. The May 6 poll yielded no clear winner and the country will hold repeat elections after President Karolos Papoulias failed in a last-ditch attempt to broker an agreement on a new government today.

Greek Vote Escalates Crisis as Schaeuble Raises Euro-Exit (Source: Bloomberg)
Greece’s decision to return to the ballot box in the search for a government unleashed a hazardous new phase in Europe’s debt crisis, with German Finance Minister Wolfgang Schaeuble calling the vote a referendum on whether the country stays in the euro. Post-election attempts to form a ruling coalition in Athens broke down today after nine days, sending Greeks back to the polls next month with surveys giving the lead to an anti-bailout party that would tear up the conditions attached to 240 billion euros ($307 billion) of aid. “If Greece -- and this is the will of the great majority - - wants to stay in the euro, then they have to accept the conditions,” Schaeuble told reporters at a meeting of European finance ministers in Brussels. “Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.”
The euro tumbled to a four-month low, European stocks dropped and investors sought the safety of German bonds amid speculation that Greece would be forced out and pull other countries with it, doing untold damage to the European financial system. The Greek quagmire raised the tension for a meeting in Berlin tonight between German Chancellor Angela Merkel, the dominant figure in euro crisis management, and Francois Hollande, who took office as French president today in the first power shift to the Socialists in France since 1981.

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