Economy

A double whammy for Euro Zone

R.Y. Narayanan Coimbatore | Updated on June 26, 2012

The position has become more vulnerable with reports of the rating agency downgrading 28 Spanish banks, followed by news about the resignation of the new Greek Finance Minister.

Just as hopes of a recovery of the Euro zone are building up, the region appears to have suffered a double whammy with the downgrading of 28 Spanish banks on Monday by Moody’s and the resignation of the new Greek Finance Minister-designate, Mr Vassilis Rapanos, for health reasons.

Mr Vassilis Rapanos, 64, had to be taken to hospital on Friday even before he was sworn in due to ill health.

According to media reports, the Greek Prime Minister, Mr Antonis Samaras, had accepted Mr Rapanos' resignation. The resignation should come as a shock to the new pro-Euro Greek government which took office a few days back after fresh elections.

Now, Cyprus to seek aid

It has been reported that Cyprus was also planning to seek financial aid, making it the fifth Euro zone country to seek financial support. The country cited that it needed to strengthen its banks that have high exposure to Greece. It is not yet clear what would be the size of the aid package it would be seeking.

The Dow Jones Industrial Average fell 138 points and Nasdaq was down 56 points on Monday. The key European indices, too, were weak on Monday when news broke out that the Spanish Government had sought Euro Zone rescue loans of up to $125 billion.

The position has become more vulnerable with reports of the rating agency downgrading 28 Spanish banks, followed by news about the resignation of the new Greek Finance Minister.

Key European indices weak

The key European indices like FTSE, CAC and DAX opened in the green just a while back today amidst all round negative news flow but they are up barely. In Asia, while Nikkei and Taiwanese markets were down this morning, Hang Seng was up.

The BSE Sensex is down marginally by 13 points, at 16,895.

Published on June 26, 2012

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