|
 One fund manager described it as "herd behavior" and said few
people were buying.
The main Athens stock index <.ATG> was down more than 18 percent in
midday trading after an initial plunge that was larger than any
one-day loss experienced on the bourse. By contrast, the broad
European FTSEurofirst 300 index gained slightly <.FTEU3>.
Banking shares, which make up about 20 percent of the Greece index,
were particularly hard hit. National Bank of Greece <NBGr.AT>, the
country's largest commercial bank, was down 30 percent, the daily
volatility limit. The overall banking index <.FTATBNK> was also down
to its 30 percent limit.
Greece's banks have seen deposits severely depleted as Greeks have
withdrawn their euros for fear the would be forcibly converted into
a new drachma outside the euro zone. The banks have been propped up
by emergency money from the European Central Bank.
"Bank shares look like they have more room to slide on Tuesday
before bids emerge," said the fund manager, who declined to be
named. "It will take a few days for the market to balance out."
 Some companies outperformed, mainly those with exposure abroad,
although they still fell.
Greece's biggest telecoms operator OTE <OTEr.AT>, along with jeweler
Folli Follie <HDFr.AT> and aluminum producer Mytilineos <MYTr.AT>,
which are mainly exporters, saw their initial losses ease.
"Non-financial companies will have a better performance than the
banks, since their prospects are brighter and are less exposed to
the domestic market," said Manos Chatzidakis, an analyst at Beta
Securities.
FEARS FOR FUTURE
Trading on the Athens bourse was suspended in late June as part of
capital controls imposed to stem a debilitating outflow of euros
that threatened to collapse Greece's banks and hurl the indebted
country out of the euro zone.
Since then, Athens has agreed a framework bailout plan with its
European Union partners in exchange for stringent reforms and budget
austerity.
But implementation of the deal is some way off, keeping alive the
threat of political and economic instability. There is also concern
that Prime Minister Alexis Tsipras may need to call a snap election.
[to top of second column] |
Monday's losses stemmed from a number of reasons. Negotiations on
the new bailout might bog down, for example, leaving the government
and banks perilously short of cash.
A report on Sunday in the newspaper Avgi, which is close to Syriza,
said the government was seeking 24 billion euros ($26.37 billion) in
a first tranche of bailout aid from international lenders in August.
Of this, the newspaper said, 10 billion euros was earmarked for an
initial recapitalization of Greek banks, 7.16 billion euros to repay
an emergency bridge loan and 3.2 billion euros to repay Greek bonds
held by the European Central Bank and others.
The European Commission, however, believes an agreement in August is
unlikely and that a new bridge loan will be needed.
Greeks themselves are being severely restricted. To limit the
possibility of using shares as part of euro-flight, the government
and ECB have said no extra money can be withdrawn by Greeks from
deposit accounts to buy shares.
Greece's dismal economic prospects may also weigh on the market. The
European Commission says the Greek economy will shrink by 2 to 4
percent this year, a return to the recession that plagued the
country for six years until 2014.
On Monday, a survey showed Greek manufacturing activity plunged to a
record low as new orders plummeted and the three-week bank shutdown
caused serious supply problems.
Greece's economic sentiment also hit its lowest level in almost
three years in July, a monthly report by the IOBE think tank showed.
(Writing by Jeremy Gaunt, editing by Larry King)
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