By Maximilian Clarke
European stock markets fell sharply on opening this morning due to the news that Greece is likely to miss targets to cut its budget deficit.
Athens announced that the 2011 deficit is projected to be 8.5% of GDP, down from 10.5% in 2010, but short of the 7.6% target set by the EU and International Monetary Fund. The government, which on Sunday adopted its 2012 draft austerity budget, blamed the shortfall on deepening recession.
Share indexes in London, Frankfurt and Paris opened between 2.5% and 3.5% lower. Asian stocks also fell.
“The falls reflect concern from investors that the Eurozone countries will not be able to meet their debt payments causing tangible fears of another credit crisis,” commented John Douthwaite CEO of SimplyStockbroking.
“However, some investors are seeing the situation of a falling market as an opportunity to pick up undervalued stock, and are using the downturn to capitalise on the heightened volatility in the markets. As a result we are seeing cautious buying from canny investors looking at longer-term investments.”
John continued, “As a result of this activity the markets will begin to recover and climb steadily in the coming months as fund managers invest new monies into undervalued shares ahead of the year end in December. In the meantime, some investors will be waiting in the wings looking to capitalise on further buying opportunities should market growth falter.”
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