European Stocks Fail to Sustain Rally After Greek Election

Posted June 18th, 2012 at 5:45 am (UTC-5)
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Stocks in Europe gave up their initial gains Monday, failing to continue a rally seen in Asia after pro-bailout parties won enough votes in Greece's parliament elections to form a government.

Greece's stock exchange was the exception, maintaining a 5-percent jump hours into trading. But elsewhere in Europe, fears about other struggling economies – including Spain and Italy – erased early gains.

Japan's Nikkei index finished the day up nearly 2 percent, and in Hong Kong, the Hang Seng gained 1 percent.

Analysts cautioned Monday that challenges still remain in Greece, Europe and the world economy, and that any rally could be short-lived.

The European Union and the International Monetary Fund have placed harsh austerity conditions on Greece in exchange for bailout funds. The cuts are not popular in Greece, where parties opposed to the package have called for it to be annulled.

The ongoing turmoil in the 17-member eurozone has affected markets outside of the continent.

In Afghanistan Sunday, the head of money exchangers in Kabul, Amin Jan Khosti, told VOA that traders were swapping euros for dollars to escape the fluctuating situation in Europe.

“Because today when I was at the market, people mostly exchanged euro. They think if today's Greece's turn, maybe tomorrow is Spain and next it will be Portugal's turn. People think every day their budget deficit is getting deeper.”

Khosti says Afghan businessmen are worried that the euro's ups and downs will damage their trading. He also says Afghans are already thinking about how the pullout of international troops in 2014 will affect the country's financial situation.

((additional opt act Khosti:

“Because it was Sunday in Europe and we couldn't check the value of the euro online, but when the news about Greece's election and opposition being ahead in the polls reached us, euro, which traded 1.26 to dollar, came down to 1.06. People were trying to exchange euro to dollar.”