Markets volatile amid elections uncertainty
LONDON (AP) -- Greek election results reignited concerns over the country's ability to stave off bankruptcy, though losses elsewhere were trimmed on hopes that France's new president may prompt a change in Europe's strategy to fight the debt crisis.
Athens' stock market closed 6.7 percent lower after Sunday's election resulted in a massive loss of support for the two main parties that had backed the international bailout and its related austerity program.
Votes transferred mostly to extremist parties, making it difficult to form a new government that would support the rescue package -- meaning another election may be held in two months.
Antonis Samaras, leader of conservative New Democracy, which won the most votes, is currently trying to form a government, but amid the uncertainty, investors took fright.
Elsewhere in Europe, however, the early downbeat mood improved somewhat as investors awaited the arrival of Hollande as French president following his defeat of Nicolas Sarkozy on Sunday.
Hollande campaigned on the need for more growth-generating economic policies and less reliance on austerity. While economists agree more growth would help fight the debt crisis, some fear Hollande could upset the balance in European policies and irk Germany, which has been one of the main proponents of austerity as a means to deal with the debt crisis.
"Ultimately much may have changed in Europe as a result of the weekend elections, but there is no need for wholesale panic," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "The result is likely to be the growing recognition of growth in Berlin."
That sentiment helped the CAC-40 in France, which following early losses was trading 0.8 percent higher at 3,188.
Germany's DAX also trimmed losses to be trading only 0.4 percent lower at 6,536 after new figures showed the country's factory orders rose 2.2 percent in March, more than expected, despite an economic downturn in Europe.
Also helping markets recover from early losses was Spain's decision to present measures this week to support the banking sector -- a key source of worry over whether the country might need a financial bailout. Prime Minister Mariano Rajoy said he would not rule out lending, or injecting public money into the sector if necessary.
Madrid's main stock index rallied 1.8 percent on the news. Elsewhere, the FTSE 100 of leading British shares was closed for a public holiday.
In the U.S., the Dow Jones industrial average was down 0.4 percent at 12,984 while the broader S&P 500 inde fell 0.3 percent to 1,365.
In the currency markets, the euro recovered its poise after falling to a three-month low against the dollar during Asian trading hours. It was up 0.5 percent at $1.3040, having earlier fallen to $1.2972.
Earlier in Asia, Japan's Nikkei 225 index plunged 2.8 percent to close at 9,119.14 -- its lowest finish in three months -- with the market's export sector also sapped by a rising yen. Hong Kong's Hang Seng slid 2.6 percent to 20,536.59. In other Asia markets, Australia's S&P/ASX 200 lost 2.2 percent to 4,301.30 and South Korea's Kospi shed 1.6 percent to 1,956.44.
Oil prices fell alongside equities, with the benchmark New York rate down 76 cents at $97.73 a barrel.