Anti-austerity backlash rattles Europe markets

Paris: Arab News An anti-austerity backlash by voters in Greece and France shook the euro zone yesterday, causing jitters for the euro currency and stock markets amid deepening doubts about whether Greece has a future in the single currency area.

Greece plunged into turmoil after a general election boosted farleft and far-right splinter groups, stripping mainstream parties that back a painful EU/IMF bailout of their parliamentary majority.

That raised questions over whether the country could avert bankruptcy and stay in the euro as Antonis Samaras, leader of the conservative New Democracy party which won the biggest share of the vote, struggled to cobble together a government.

The shock Greek result overshadowed France’s presidential election, in which Socialist Francois Hollande, who wants to change Europe’s policy focus from austerity to restoring growth, ousted Nicolas Sarkozy.

German Chancellor Angela Merkel, who had openly supported Sarkozy, her partner in euro zone crisis management, pledged to welcome Hollande “with open arms” and work with him to maintain strong Franco-german cooperation at the heart of Europe. But she also made clear there could be no renegotiation of a fiscal discipline treaty.

The Greek and French votes unsettled investors, undermining confidence in Europe’s plans to cut spending and tackle the debt crisis, given the scale of public opposition.

The euro fell to a three-month low of $1.2955 in Asia before recovering trade at around $1.3050 at 1600 GMT. European stocks slipped early in the day on the Greek news but most recovered later, except the Athens stock exchange, down 6.67 percent.