Greek stocks fall sharply

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Greece national flag1 REUTERS Picture: John Kolesidis / Reuters

Athens - The Athens stock exchange fell 3.15 percent on Friday, the second sizeable drop in two days as the country headed for local polls expected to test the coalition government.

And for a second day, bank shares led the way with a 5.56-percent retreat after a 5.79-percent fall a day earlier.

On Thursday, the stock index had lost 4.63 percent, falling to the lowest level since the end of 2013 amid heavy selling of bank shares.

This had followed the release of a note by ratings agency Standard and Poor's warning that Greek lenders were likely to face “large credit losses” over the next two years.

“Despite the recently completed capital increase, we anticipate that Greek banks will need to increase the size of their capital cushions further because we expect them to face large credit losses over the next two years,” the agency said.

There was also pressure on Greek bonds, with the interest rate on benchmark 10-year debt on Thursday climbing from 6.31 percent to 6.84 percent in a day.

Local, regional and European parliament elections will be held in Greece on May 18 and 25.

The main opposition radical leftist Syriza party is seen as a frontrunner in polls, at the expense of the coalition conservative and socialist parties whose popularity has dipped owing to continued austerity reforms. - Sapa-AFP

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