European shares and periphery eurozone bonds tumbled on Monday after the Greek parliament rejected the government’s presidential candidate, setting the stage for a snap election in 2015.
Greek Prime Minister Antonis Samaras announced plans for an early general election next month after parliament rejected his candidate for president on Monday, throwing the country’s international bailout into doubt.
After three rounds of voting, the only candidate in the race, former European Commissioner Stavros Dimas, fell short of the 180 vote supermajority needed to become president. He secured 168 votes in parliament, the same score he achieved in the second round, triggering a procedure leading to the dissolution of parliament, Reuters reported.
Opinion polls point to a victory by the radical leftist Syriza party, which wants to wipe out a big part of Greece’s debt, and cancel the terms of a bailout from the European Union and International Monetary Fund that Greece still needs to pay its bills.
Stocks in Athens plunged as much as 11 percent to a two-year low and yields on government bonds spiked sharply.
European markets reflected uncertainty about Greece’s future in the euro zone under a possible Syriza government. Benchmark stock indexes of Italy and Spain slid more than 1.9 percent, as Germany’s DAX Index declined 0.6 percent and the pan-European Euro Stoxx 600 Index fell by around 0.6 percent. Samaras immediately announced that he would meet outgoing President Karolos Papoulias on Tuesday to propose holding parliamentary elections on Jan. 25 and called on Greek voters to ensure stability was preserved.
Meanwhile, the European Central Bank said it was seeking views from Greek authorities on how to proceed with the review of the country’s bailout, after lawmakers failed to elect a new president.
“It’s now for the Greek electorate to decide about the future composition of the parliament and the government. We will not interfere in or comment on this democratic process,” the ECB said in a statement.
