Markets: Greece Returns To Haunt Markets

Commodity and stock markets across Asia and Europe and the US are on alert as Greece moves back to centre stage with a vital week for the stricken country to either accept sweeping cuts and a huge new round of debt, or head for default.

Shares and commodities fell on Friday (the US markets had their worst day of 2012 so far) as previously confident investors suddenly got a dose of Greek-inspired jitters.

Gold, oil and copper were weak on Friday and they capped a week which saw falls all round.

The worries saw the Aussie dollar lose ground on Friday night and it lost a cent against the greenback to close at $US1.060 in New York.

European sharemarkets fell from six month highs as the delays and doubts about Greece spread.

The Stoxx Europe 600 Index fell 1.3% to 261.24, down from its highest level since late last July.

But Asian markets managed to hang on for a weekly gain, except for Australia which dropped because of Friday's weakness.

Greece is set to come to a head on Wednesday, putting the 2012 rebound to the test.

The deadline will come the same day as official figures are expected to show the eurozone entered a mild recession in the 4th quarter of 2011.

But it is Greece and the March 20 deadline, when the country must find 14 billion euros ($US18.6 billion) to meet debt repayments or face the prospect of a chaotic default, that will hold the market's attention.

Eurozone officials have said February 15 (Wednesday) is the cut-off points for agreement on the 139 billion euro bailout deal, without which Greece will have no funds to cover the March repayments.

European finance ministers have demanded a vote on the agreed-upon austerity measures later this week before allowing any more financial aid to Athens.

Greek unions and others completed two days of strikes and protests ahead of a parliamentary vote overnight Sunday.

The scenes and some of the slogans don't inspire confidence that Greece will stick to whatever agreement it reaches, meaning the prospect of default will be with us for perhaps years to come.

The results of the Parliamentary vote are expected around 10 am today, Australian time.

According to Reuters, Greek Prime Minister Lucas Papademos told parliamentarians on the weekend that they had to back the deeply austere rescue package in a vote Sunday or condemn the country to "uncontrolled economic chaos and social explosion".

He made the statement in a televised address to the nation ahead of the vote on 3.3 billion euros ($US4.35 billion) in wage, pension and job cuts - the price of a 130-billion-euro bailout from the European Union and International Monetary Fund.

Papademos said parliament had a historic responsibility to back the bill, or face catastrophic consequences if the country misses a March 20 deadline to service its debt.

"A disorderly default would set the country on a disastrous adventure," he said. "It would create conditions of uncontrolled economic chaos and social explosion.

"The country would be drawn into a vortex of recession, instability, unemployment and protracted misery and this would sooner or later lead the country out of the euro."

All colourful stuff, but true.

If the rescue package is approved and put in place, its private sector creditors will have to accept a 70% reduction in the value of their holdings.

But the government claims another 15 billion euros might have to be forthcoming to help the country's weak banks survive. Sounds like a black hole.

Investors have been watching Greece head towards this vote for weeks, but instead of trading in fear, they've ignored the tension and pushed markets higher in the best start for a year for five years.

If the Greek parliament's vote is narrow or negative, then the market worries won't go away.

In the US, the Dow fell 89.31 points, or 0.7%, to 12,801.15.

The Standard & Poor's 500 dropped 9.33 points, or 0.7%, at 1342.62. The Nasdaq was down 23.35 points, or 0.8%, at 2903.88.

The Down lost 0.5% for the week and the Nasdaq dipped just 0.1%.

The S&P 500's 0.7% fall on Friday was its biggest percentage decline so far in 2012 after fears about Greece returned after five weeks streak of gains.

The S&P 500 lost 0.2% last week, the first losing week of the year but is still up nearly 7% so far in 2012.

In Australia, Wall Street's fall overnight Friday will see the local market open softer today as investors watch out for the results of the Greek parliament vote.

The Share Price Index futures contract lost 19 points to 4199 by the close of trading early Saturday, our time.

That was after the local markets lost ground Friday and ended down 38 points (for the ASX 200) at 4245.3 points, a drop of 0.9%.

That was a small fall of just over 0.1% or 5.8 points for the week.

In Europe, Bloomberg said that indexes in 13 of the 18 western-European markets fell last week.

France's CAC 40 Index slipped 1.6%, Germany's DAX Index dropped 1.1% and the London's FTSE 100 Index fell 0.8%.

In Asia, the MSCI Asia Pacific Index rose 0.4% last week.

Tokyo's Nikkei added 1.3%; South Korea's Kospi Index climbed 1.1% and the Shanghai market rose 0.9%. Singapore's Straits Times Index rose 1.4% and the Hang Seng in Hong Kong rose 0.1%.

Gold and oil prices both eased Friday, but had conflicting weekly performances.

Gold lost 0.9% for the week, based on Comex figures, while US oil prices rose 0.8% for the week.

Comex April gold futures fell $US15.90, or 0.9%, to settle at $US1,725.30 in New York.

Comex March silver dropped 31USc, or 0.9%, to close at $US33.60 an ounce. Silver lost 0.4% for the week.

Comex March copper lost 12USc, or 2.9%, to close at $US3.86 per pound after the latest Chinese trade figures were issued, showing a dip in copper imports last month.

Copper lost 1% on the week.

Over the week, palladium lost 0.8%, but platinum gained 1.7%.

New York crude-oil futures fell Friday after the International Energy Agency cut its outlook for global oil demand, and Greece and its debt crisis returned to worry sentiment lower.

Nymex crude oil for March delivery fell $US1.17, or 1.2%, to $US98.67 a barrel.

Earlier Friday, the IEA cut its 2012 estimate for global oil demand to 800,000 barrels a day, versus a prior forecast of 1.1 million barrels a day, citing lower global growth projections.

It noted global GDP growth is now forecast at 3.3% for 2012, from the 4% level assumed since September.

Earlier in the week, the Organization of the Petroleum Exporting Countries also cut its 2012 world oil demand expectations to 940,000 barrels per day, or 120,000 barrels per day less than its forecast last month, pinning the decision on "recent economic setbacks".

Both forecasts were at odds with one from the US Department of Energy's Energy Information Administration which said last Tuesday that global demand growth for oil will reach 1.3 million barrels per day, 50,000 barrels per day more than its previous estimate and its first forecast increase in four months.

In London Brent March crude futures fell $US1.28 to $US117.31 a barrel.

The fall left Brent up 2.4% for the week, its third straight weekly rise.