LONDON (AP) ? Stocks took a hammering Monday as Greece struggled to convince international creditors that it can meet its obligations in return for more bailout cash that it needs to avoid running out of funds as soon as next month.
With Prime Minister George Papandreou canceling a trip to the United States and the Greek cabinet meeting to come up with fresh austerity measures, investors remain concerned that the country will not get its hands on the euro8 billion ($11.01 billion) due from last year's euro110 billion bailout. On Friday, eurozone finance ministers in Poland decided to delay authorizing the payout until early October. At risk are not only the installment from the 2010 rescue package but also a second bailout worth euro109 billion.
"The news from the weekend meeting in Poland, with the attendance of U.S. Treasury Secretary Geithner, did not help market sentiment and only underscored the great divide amid the powers that be," said Sue Trinh, a senior analyst at RBC Capital Markets.
Greece's finance minister, Evangelos Venizelos, is due to host a teleconference later Monday with representatives of the country's international creditors, the European Commission, the European Central Bank and the International Monetary Fund. His task is to convince them that Greece is doing enough to warrant the release of the next batch of bailout cash.
While investors keep a close watch on the internal debate in Greece, they are also monitoring developments in Germany after Angela Merkel's government suffered a big electoral defeat in Berlin, which more or less wiped out her FDP coalition partners.
Michael Hewson, markets analyst at CMC Markets, said the election result just adds "to the uncertainty with respect to the German government's ability to reassure markets, at the same time as reassuring its voters it's not signing blank cheques for Greece, or anyone else."
With so much uncertainty, it's not surprising that stocks have started the week in retreat, especially after last week's solid gains.
In Europe, Germany's DAX was down 2.5 percent at 5,433 while France's CAC-40 fell 2.7 percent to 2,948. The FTSE 100 index of leading British shares was 1.8 percent lower at 5,274.
Wall Street was poised for sizable declines at the open later ? Dow futures were 1.3 percent lower at 11,294 while the broader Standard & Poor's 500 futures fell 1.6 percent to 1,192.
Aside from Greece, the other main focus in the markets this week will be Wednesday's monetary policy decision from the U.S. Federal Reserve. There are growing expectations that the central bank will introduce some new measures to help boost the U.S. economy, which has seen growth slow down sharply this year. However, few in the markets think that the Fed will announce another monetary stimulus given inflation levels remain relatively elevated.
While stocks were under pressure, currencies were trading in fairly narrow ranges, with the euro up 0.1 percent at $1.37 and the dollar down 0.1 percent at 76.80 yen.
In Asia, Hong Kong's Hang Seng index plunged 2.3 percent to 19,005, while South Korea's Kospi index fell 1 percent at 1,821. China's main index in Shanghai was 1.8 percent lower at 2,438.
Japanese financial markets were closed Monday for a national holiday.
In the oil markets, prices tracked equities lower ? benchmark oil for October delivery was down $1.36 at $86.60 in electronic trading on the New York Mercantile Exchange.
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