Fears for eurozone as Greece leads revolt against austerity

Europe was gripped by fresh turmoil today with growing fears that Greece will crash out of the single currency.

Political chaos in Athens and worries over Franco-German relations after François Hollande’s victory in the French presidential elections saw markets dip this morning. Dark clouds hung over the eurozone as:

The far-Left Syriza group in Greece sought to form a coalition after two thirds of Greeks voted against parties backing German-enforced austerity measures.

France and Germany were under intense pressure to agree a deal combining austerity with a greater focus on growth to avoid a catastrophic split at the heart of Europe.

Spain was poised to do a U-turn and plough billions more into propping up its banking sector.

Italian voters in local elections turned their back on pro-austerity parties and the centre-Right People of Liberty party, which supports Mario Monti’s government, threatened to oppose the eurozone pact to rescue the single currency.

Mr Hollande took a swipe at the UK, saying: “The British have been particularly timid about the question of financial regulation and only concerned by the interests of the City.”

The Irish government refused to delay a referendum, planned for May 31, on the fiscal pact with No campaigners calling for a vote against “writing austerity into law”.

In Athens, Greece’s New Democracy leader Antonis Samaris, whose party topped the poll, failed yesterday to put together a coalition, leaving it to the Left-wing parties to try to form a government, which would be opposed to the country’s EU/IMF bailout.

The Greek stock market also fell further today, down 3.5 per cent shortly after 2pm, after Far Left leader Alexis Tsipras, who is seeking to form a coalition, said Greece’s IMF/EU austerity deal was “null and void”.

Investors were flocking to safe havens including Britain where the yield on long-term gilts fell below two per cent.