Impasse in Greek Bailout Talks Triggers Market Slump

June 15, 2015 Updated: June 15, 2015
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ATHENS, Greece—French President Francois Hollande called on Greece on Monday to swiftly resume negotiations with bailout lenders after the failure of a round of talks over the weekend unsettled markets around the world.

“Greece must not wait… there’s not a moment to lose,” Hollande said. He warned of the risk of “turbulence” in Europe if no deal is reached.

Shares on the Athens Stock Exchange were 4.5 percent lower in midday trading, after dropping more than 7 percent. Greek borrowing costs rose, a sign investors are more worried about default, with yields on two-year bonds up a sharp 2.6 percentage points to 28.4 percent. Markets also fell across Europe and other regions.

The weekend talks in Brussels between negotiators from Greece and its bailout lenders failed to bridge differences despite mounting pressure on Athens, which has taken the emergency measure of bundling its June repayments to the International Monetary Fund until the end of the month.

Hollande said he was likely to have the opportunity to speak soon with both Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel.

In Athens, Tsipras held an emergency meeting with the team of Greek bailout negotiators, and said the talks had stalled on demands by the creditors — the other eurozone states and the IMF — for a new round of pension cuts, which his government rejected.

Greek officials said that the two sides were still at odds over proposed sales tax hikes and how big a budget surplus the country should have when excluding debt interest payments.

“This is not an issue of ideological stubbornness. It’s about democracy … We will patiently wait for the institutions to display realism,” Tsipras wrote in the daily newspaper, Efimerida ton Syntakton.

Eurozone finance ministers are due to meet Thursday, but German officials appeared doubtful that an agreement could be reached by then.

“Time has again been lost because of Greek omissions,” German Finance Ministry spokesman Martin Jaeger said. “Time is getting tight.”