Greek banking stocks plunge again as debt crisis dominates

An electronic board diplaying share prices at the Stock Exchange in Athens, Greece on Aug 3, 2015.
An electronic board diplaying share prices at the Stock Exchange in Athens, Greece on Aug 3, 2015. PHOTO: EPA

ATHENS (REUTERS) - Greece's banking stocks plunged for the second day in a row on Tuesday, dragging the main Athens index down and reflecting the country's continuing financial and economic woes.

The banking index, comprising the four major lenders, was down 29.2 per cent, virtually at its 30 per cent daily limit for losses. It hit the limit on Monday.

The overall Athens General Index was down around 4 per cent after opening higher. Some non-financial stocks gained. Gaming group OPAP was up 3.5 per cent and Aegean Airlines gained 2.7 per cent.

No spillover was evident to other European markets. Many investors have cut their exposure to Greece and are focusing more on the state of core markets such as Germany and France.

The Athens index lost 16.2 per cent on Monday, the worst fall on record, wiping out nearly 8 billion euros of market value as investors worried about a new bailout from the European Union and reacted to Greece's worsening economy. Some believe the rout will soon end.

"The nearly 30 percent drop in early (banking) trades should attract buyers later in the session, helping the banking index balance out at higher levels than this," said Takis Zamanis, chief trader at Beta Securities.

Trading in Athens resumed on Monday after being suspended for five weeks as part of capital controls imposed to stem a debilitating outflow of euros that threatened to cause a banking collapse and force the indebted country out of the euro zone.

Although Athens is in new bailout talks with its European Union partners the threat of political and economic instability remains.

The economy, meanwhile, has reversed course and is heading into recession again.

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.