LONDON (ShareCast) - -Markets down on France/Greece Elections
-Spanish lender Bankia may receive state support

FTSE-100: -1.72%
Dax-30: -1.95%
Stoxx 600: -1.67%
Cac-40: -2.80%
Ibex 35: -0.95%
FTSE MIB: -2.38%

Political risk was the main focus of investors’ minds on Tuesday as all major European stock markets fell in the wake of elections in France and Greece.

In France, the new President Francois Hollande has signalled he wants to reverse the current Eurozone policy of austerity.

He has not explained clearly to markets how this change of direction would make lenders any more keen to buy French debt - the country’s 10-year bond yield climbed two basis points today to 2.83%.

In Greece, the epicentre of the debt crisis, the election left no one party in overall control and the party with the biggest number of seats, New Democracy, admitted yesterday it could not form a coalition which would continue to abide by the budget commitments already made to the IMF and Eurozone countries.

The left wing Syriza block, which came second, is now attempting to form a government which would renegotiate with Greece’s lenders - a policy which will not go down well in Berlin.

COMPANIES

Amidst the macro-squall there have been some big corporate developments - it seems as if Spain’s third largest lender - Bankia - may need to be propped up by the state. Its shares dropped 4.8%.

Dutch phone company KPN rocketed 17% after an offer for an increased stake (at €8 per share) came in from America Movil.

Gas and oil engineer Technip was the biggest faller in Paris, down 6.2%.

OTHER MARKETS

The euro was 0.25% down against the dollar at 17:02 UK time at $1.3018.

Front month futures contracts on a barrel of Brent crude had fallen 1.6% by 16:46 in London to $111.36.

BS

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