Business

European shares fall amid Greek default fears

Greece bank Image copyright AP

Shares on European stock markets have fallen amid reports that senior EU officials have discussed a possible Greek default for the first time.

The Athens stock exchange closed nearly 6% lower. Germany's Dax and France's Cac 40 ended more than 1% lower.

Shares also fell in the US, with the Dow Jones index dropping 0.8%.

Cash-strapped Greece is trying to reach a deal that will unlock bailout funds. It is seeking to avoid defaulting on a €1.5bn debt repayment to the IMF.

The payment is due by the end of the month.

According to official sources quoted by news agencies, senior eurozone officials meeting in Bratislava on Thursday held their first formal talks on the possibility that Greece might default.

Also on Thursday, officials from the International Monetary Fund (IMF) pulled out of talks with Greek politicians in Brussels, citing "major differences".

Shares on the Athens Stock Exchange had soared on Thursday amid renewed optimism about Greece's talks with its creditors. The index climbed more than 14% - the best performance in several weeks.

But the IMF's withdrawal has dampened investors' moods.

On Friday, Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said a deal without the IMF was "unimaginable".

On Friday stocks in the National Bank of Greece fell by more than 10%, while Piraeus Bank fell more than 11.5%.

European and US shares also fell on fears that a potential Greek default would hurt foreign investors in Greece.

However, German Chancellor Angela Merkel urged all parties to continue negotiations.

Speaking at a business conference in Berlin, Ms Merkel said: "Where there's a will there's a way, but the will has to come from all sides, so it's important that we keep speaking with each other."