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Greece's euro crisis infects Amsterdam's stock exchange

The growing likelihood that Greece will leave the euro has prompted sharp falls on Amsterdam’s stock exchange as investors staged a mass retreat from the eurozone.

By close of business on Monday the AEX had dipped below 300 points, losing 2.4 per cent of its value over the day. The picture was similar elsewhere in Europe, with Frankfurt’s stock exchange dropping by 2.4 per cent and Paris by 2 per cent by lunchtime.

The dip in investor confidence appears to have been triggered by the Greeks’ failure to form a government over the weekend, which has fuelled speculation that the country will be forced out of the single currency club.

European Commission president Jose Manuel Barroso warned Greece on Saturday that the country would have to leave the European Union if it failed to reduce its debts under the terms of the EU bailout deal agreed in March.

Frank Bonsee, trader with ABN Amro, told De Telegraaf that as well as the Greek situation, Spain’s spiraling interest rates had triggered anxiety in investors.

Paradoxically, the downward trend comes on the same day that interest on Dutch 10-year bonds reached an historic low mark of 1.99 per cent, illustrating how the fortunes of the eurozone nations are inextricably bound together.

Bonsee said that even though Dutch companies were broadly resilient, the eurozone crisis would continue to cast a shadow over financial centres across the continent.

‘Despite the solid business figures, the negative news about the European debt crisis is the dominant factor,’ he said. ‘In terms of day-to-day activity, the flotation of Facebook this coming Friday may provide a moment of respite.’

Maarten Schinkel, economics editor of NRC Handelsblad, said: ‘The variation in interest reflects how great the tensions are within the euro. Money is flowing from Spain to Germany and that is quite worrying.

‘A high interest level is concerning because the country has to spend more money on paying off its national debt and it is a sign that investors have little confidence in that debt. They just want their money back.’

Source: De Telegraaf: Verkoopgolf treft Damrak

NRC: Nederlandse rente op laagste punt ooit – Spaanse rente schiet omhoog

Photo by Markusram