Greek stocks tumble

Greece on Monday took another step away from crisis mode by reopening its stock markets after a five-week break, but as trading resumed, many shares listed on the stock exchange in the capital took a steep dive.

The main Athens stock index ended down 16.2 percent, after recovering slightly from a 23-percent drop in early trading.

Much of the rout was attributed to continuous uncertainty about the country's liquidity buffer.

However, it was still the worst daily performance since at least 1985, when modern records began, including a 15 percent fall when Wall Street crashed.

"The market tanked, as expected," said Takis Zamanis, chief trader at Athens-based Beta Securities.

Precautionary measure

Trading on the Athens bourse had been suspended in June as part of capital controls imposed with a view to stemming the harmful outflow of euros from the debt-stricken eurozone nation.

Since then, the government had agreed a framework bailout plan with its European Union partners in exchange for more reforms and budget austerity.

Greece's Avgi newspaper reported the government was seeking 24 billion euros ($26.37 billion) in a first tranche of more rescue aid from international lenders in August, with a big chunk of the money meant to go towards recapitalizing domestic banks.

But the European Commission indicated that an agreement about payments in August was unlikely, meaning a new bridge loan would be necessary.

With banking shares comprising some 20 percent of overall stocks listed on the Athens bourse, the remaining financial uncertainty did not bode well for the rest of the trading day on Monday.

Greek factory output tanks

Meanwhile in July, Greek factory output collapsed, falling at a record pace as capital controls imposed by Athens hampered businesses' ability to buy and sell their wares.

An important measure of the health of the manufacturing sector, Markit Economics' Purchasing Managers' Index, fell to 30.2 points from 46.9 in June. Any number below 50 signals contraction.

The plunge was Greece's single biggest since records began being kept 16 years ago. Manufacturers account for about 10 percent of Greece's gross domestic product (GDP).

"The sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole," said Markit economist Phil Smith.

Another economic indicator showed business sentiment among Greek managers dropping to its lowest level in three years.

hg/cjc (Reuters, dpa, AFP)