Situation in Greece puts pressure on markets by Magdalena Rosova

Borrowing costs of Greek government unexpectedly rose on Thursday, economists are worried about the state of the economy of the country. However, European Central Bank insists that Greece did not need any immediate help. George Petalotis, a spokesman of Greek government said that there was no need for any initiative at that time. European Central Bank is also not worried and its head Jean-Claude Trichet finds no reason for doubting the deal that involves EU states and also the International Monetary Fund. However, Greece's borrowing costs soared to a record high and last week was the heaviest for the Athens stock market. For the first time ever since Greek adopted the! euro in 2001, the gain from Greek bonds topped 7.5 percent. Greek Finance Minister George Papaconstantinou said that Greece will continue borrowing the money even though the costs imposed by financial markets is record high. The government in Greece paid all payments for April and now have to deal with May. The government hopes that interest rates on its debt will fall as the number of new bonds decrease. But analysts do not think that decision of European Union was good or lucky. They think that the the situation in bond market is sign of a lack of confidence in assistance package from EU. Nicholas Kounis from Fortis Bank Nederland believes that only bigger package would restore marked confidence. One Greek banking source said that a bailout of 2.0 to 5.0 billion euros would be able to help and restore the economy in the country. The Chaos around Greece is not good for euro, which fell to 1.3299 dollars.

related story (sgx16963): http://www.guardian.co.uk/business/2010/apr/12/greece-euro-d...

by Magdalena Rosova for Cantell TV (http://cantell.tv)

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