Markets

European Markets Close Lower as Grexit Rumblings Echo Louder

European markets closed lower on Friday as fears that Greece could be booted out of the eurozone dominated investor sentiment.

Speculation over a potential "Grexit", as the hypothetical departure of Greece from the eurozone has been dubbed, has been rife for the past four months as the country's leaders have grappled to secure a bailout with international creditors.

With a debt repayment deadline postponed by the International Monetary Fund (IMF) to give the cash-strapped country three more weeks to cough up its dues, comments made by IMF head Christine Lagarde to the German newspaper Frankfurter Allgemeine Zeitung on Thursday, resonated across the region.

"Noone wishes the European a Grexit," Lagarde told the FAZ, but warned that "it's very unlikely that we will reach a comprehensive solution in the next few days."

Although Ms Lagarde indicated that a potential Grexit would not spell the end for the eurozone, if the cash-strapped country fails to repay its loans by the extended deadline, it is unlikely to receive desperately-needed funds to pay its pensioners and public service workers and could face the prospect of going bankrupt.

Meanwhile, in Spain, the annual change of the flash estimate of the Consumer Price Index stood at -0.2% in May, four tenths higher than that registered in April, according to INE, the country's national statistics body.

In company news, shares in London-listed financial services provider Old Mutual closed lower 2.4% after the saying it has agreed to sell Skandia Leben AG in Switzerland, part of Old Mutual Wealth, to Life Invest Holding AG, a company owned by the Mutschler Group and Hannover Re.

And shares in luxury designer brands Burberry and LVMH Moet Hennessy Louis Vuitton SE closed down 0.2% in London and down 2.6% in Paris, respectively.

The FTSE 100 closed down 0.80%, the DAX slid 2.26% and the CAC-40 ended lower 2.53%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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