European stocks fell for a second day and US shares traded flat today, erasing strong gains in the premarket session after news Greece will hold new elections put the debt-stricken country's bailout package and debt repayments further at risk.
The euro weakened, reversing an earlier gain, and Treasuries pared losses after it emerged that president Karolos Papoulias had failed to broker a governing coalition following an inconclusive May 6th vote.
"The country is once again headed to elections in a few days under adverse conditions," Evangelos Venizelos, the leader of the socialist Pasok party said. "The Greek people told us they didn't want elections but a coalition government, that they want Greece in the euro."
UK stocks declined for a second day on the news, with the FTSE 100 dropping 0.5 per cent to 5,438.86 at 2.49pm in London, after earlier rising as much as 0.8 per cent on a report that showed faster-than-forecast economic growth in Germany.
The FTSE All-Share Index lost 0.5 per cent today, while closer to home the Iseq Index slid 0.3 per cent.
The Stoxx Europe 600 Index lost 1.1 per cent, and the euro weakened 0.4 per cent to $1.2775 after strengthening as much as 0.4 per cent.
The Dow Jones industrial average dropped 2.42 points, or 0.02 per cent, to 12,692.93. The Standard & Poor's 500 Index dropped 0.02 points, or 0.00 per cent, to 1,338.33. The
Nasdaq Composite Index gained 5.89 points, or 0.20 per cent, to 2,908.47.
Greece's political impasse means the new vote will have to be held as early as next month, with polls showing that could boost the anti-bailout Syriza party to the top spot.
There are fears that the country may run out of money by early July.
The standoff has reignited concern the country will renege on pledges to cut spending as required by the terms of its two bailouts negotiated since May 2010, and, ultimately, leave the euro area.
Agencies
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