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Greek shares stabilize as unemployment drops

, August 7, 2015, 0 Comments

Greek-shares-stabilize-unemployment-MarketExpress-inGreek stocks have made a tentative comeback after a three-day rout that especially saw the country’s ailing banks lose more than half their value. The news coincided with a slight fall in joblesness.

The stock exchange in Athens stabilized on Thursday, with the ATHEX index of leading Greek shares gaining 3.5 percent following a loss of more than 19 percent in the previous three days.

The ATHEX suffered a record-setting plunge of 16 percent on Monday, when the Athens Stock Exchange reopened after a five-week closure caused by massive capital flight amid talk of the country’s exit from the eurozone.

On Thursday, banking stocks rebounded most strongly with a 14-percent advance, recovering partly from losses of up to 63 percent since Monday. National Bank was up 23 percent, Eurobank gained 15 percent and both Piraeus Bank and Alpha Bank rose about 5 percent.

Uptick in jobs

The stock market rebound coincided with a slight improvement in Greece’s dismal unemployment figures. The Greek statistics agency ELSTAT reported a drop in joblessness to 25 percent in May from 25.6 percent in April.

The reading in May, based on seasonally adjusted data, was the lowest since June 2012, when unemployment stood at 24.9 percent. The jobless rate hit a record high of 27.9 percent in September 2013.

Nevertheless, the Greek economy remains severely depressed as it contracted 0.2 percent in the first quarter of 2015, dipping back into recession after a fragile recovery last year.

Originally, the country was expected to expand by about 0.5 percent this year, but disagreement with Greece’s international creditors over the terms of a new bailout and the imposition of capital controls have resulted in a further slowdown in economic activity.

New bailout deal in doubt

In the meantime, negotiations on a third bailout worth 86 billion euros ($93.6 billion) have continued between Greece and its bailout lenders, the EU Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF).

On Wednesday, Prime Minister Alexis Tsipras expressed optimism that a deal for fresh aid in exchange for economic reforms would soon be reached and described the talks as “on the home stretch.”

Greece has just two weeks until an August 20 deadline when it must make a 3.2 billion-euro debt repayment to the European Central Bank.

But a report on Thursday in Germany’s Bild newspaper, citing anonymous sources, said senior government officials in Berlin doubted a deal was likely to be reached by August 20, meaning that Greece would have to receive financing from a new bridge loan.

EU Commission spokeswoman Mina Andreeva dismissed the Bild report, saying the EU negotiating team had been reporting “satisfactory progress.”

“I’m not aware that anyone else has been on the ground and would therefore have a better overview than we do,” Andreeva said.

German Chancellor Angela Merkel’s government has maintained a hard line with Greece throughout the debt crisis, insisting on compliance with previous agreements before fresh assistance is offered.