Greek market divides as banks sink, other shares rise

The banking index was down more than 29 per cent, while almost all other blue chip shares rose.
The banking index was down more than 29 per cent, while almost all other blue chip shares rose. PHOTO: EPA

ATHENS (REUTERS) - Greece's banking stocks plunged for the second day in a row on Tuesday, holding down the main Athens index which otherwise looked as if it was turning the corner after the previous day's record rout.

With lenders in dire need of recapitalisation after a flight of euros from deposits for most of this year, the banking index was down more than 29 per cent, bumping up against the 30 per cent daily loss limit at which trading is halted. It hit that limit on Monday.

But almost all other blue chip shares rose and the main index, of which around 20 per cent is banks, was down only 2.4 per cent as already historically low valuations fall to levels at which investors start moving back in.

On Monday, the Athens General Index lost 16.2 per cent, around 8 billion euros in value, on the first day of trading after a five-week shutdown triggered as a protective measure as debt-strapped Greece sought to hang on to euro zone membership.

Many non-financial sector indexes gained on Tuesday. The blue chip retail sector, for example, was up nearly 6 percent. "The second day of trading showed clear signs we are moving towards a normalisation of the market after the long shutdown,"said Socrates Lazaridis, chief executive officer of Hellenic Exchanges. "Of the 25 constituent stocks on the FTSE large cap index, 20 (later 18) are trading positively. Only the banks are moving negatively," he told a news conference.

Among gainers were gaming group OPAP, up 4.5 per cent, and Aegean Airlines, 8.1 per cent. Some other tourism-related companies also did well.

There was no spillover evident from Greece 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.