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Greek Stocks Decline Amid Recession Concerns

Greek bourse loses ground Monday, since the new austerity measures that were outlined with the support package create fears on a steep recession that will hit the Greek economy.

Latest consolidation steps are poised to lead to a contraction of 4% this year and by 2% next year. The most recent estimates called for a contraction of 0.3% for 2010.

“In essence, the 10bn euros assistance provided to the banking sector and wage-cuts imposed on public servants and retirees are anticipated to have a counterbalancing effect in the market. Aforementioned newswire, accompanied by the strong 3-day rally is expected to result to significant equity supply but will provide investors with some levels of tranquility, thus anticipating that the trading session will not very volatile. Technically, we expect the General Index to open on slightly higher grounds, possibly towards the 1,900 – 1,910 units, with a possible comeback towards Friday’s close to follow later in the day,” Pegasus Securities says in its morning report.

"It’s back to fundamentals for investors. The scenario of debt restructuring and huge losses on GGB portfolios has disappeared for 3 years, but with GDP contraction of 4% this year and 2.6% in 2011, NPLs will rise sharply ad there are likely to be few profits if not outright losses for local banks," a senior local banking analyst told Dow Jones Newswires.

"Other countries’ banking sectors appear less risky and more attractive than ours."

Across the board, the General Index retreats 1.05% at 1,850.39.

Total turnover shapes at EUR85.69 mil. 70 stocks drop, 54 rise and 47 remain unchanged.
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