By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Greek stocks dropped Monday, under
pressure following the victory of the anti-bailout Syriza party in
Greece's general election, but European markets broadly turned
higher.
The win on Sunday by Syriza puts the future of the country's
bailout terms in question, as Syriza has said it will end austerity
measures and that it will seek to renegotiate its financial support
from the troika of lenders -- the International Monetary Fund, the
European Central Bank and the European Commission.
ECB's executive board member Benoît Coeuré said Monday that the
new Greek administration will have to repay the country's debt even
though discussions about a debt-maturity extension are
possible.
"The new Greek government knows it has the mandate from its
people to renegotiate its bailout program, including its large debt
burden," said Dermot O'Leary, chief economist at Goodbody
Stockbrokers, in a note. "European leaders do not want a return of
the uncertainty of 2012 and also know that it must be careful not
to set a precedent for other countries who may also seeking some
form of debt relief from Europe (Spain and Ireland most
prominently)."
Syriza on Monday was in talks with the Independent Greeks party,
which is also in favor of rejecting austerity measures.
Markets: Greece's Athex Composite fell 4%, with bank shares
among the hardest hit. Piraeus Bank SA fell 11%, Eurobank Ergasias
SA lost 9.3% and National Bank of Greece SA was pushed 7.9%
lower.
Greek borrowing costs surged, with the yield on 10-year
government bonds climbing 18 basis points to 8.691%.
The euro managed to come off intraday lows, after breaking below
the $1.11 level after the results of the election were released.
The shared currency was buying $1.1244, versus $1.206 late
Friday.
Also, the Stoxx Europe 600 turned slightly higher in early
morning trade, up 0.1% to 370.77 as German stocks swung to a gain.
The DAX rose 0.5% to 10,696.81, following a better-than-expected
reading of the Ifo business-sentiment survey for January.
France's CAC 40 reversed course and rose 0.2% to 4,647.80, while
the U.K.'s FTSE 100 slipped 0.2% to 6,822.64.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires