Strikes hit Greece, Spain as ECB deadline looms

"Protest turns violent in Athens, where riot police fired teargas at protesters who were hurling stones.
Imagine
ATHENS/FRANKFURT - Strikes in Greece and Spain highlighted resistance to Europe-wide austerity measures on Tuesday as the euro and shares tumbled ahead of a deadline for banks to repay a giant European Central Bank cash injection. The fifth major strike this year by Greek unions disrupted tourism and public transport in protest at planned pension cuts and later retirement, while Spanish workers shut down Madrid’s metro system in anger at a 5 percent public sector pay cut.

The risk premium on southern European government bonds over benchmark German bunds widened and the cost of insuring their debt against default rose as investors adjusted to the wider repercussions of the Greek debt crisis on the financial system at the end of the quarter, a traditional stress point. Euro zone policymakers sought to reassure markets that Thursday’s crunch date for banks to repay a record EUR 442 bln one-year liquidity injection would be managed smoothly. Spanish Economy Minister Elena Salgado said she hoped the ECB was aware of the situation of her country’s stressed banks, some of which have been shut out of inter-bank lending due to worries over bad debts and public finances. “The ECB says it doesn’t like governments to tell it what to do. I simply say I hope that in this occasion, as in others, the ECB will be aware of the needs of the Spanish financial system,” Salgado told Spanish radio.

Thursday’s repayment deadline coincides with the automatic date for some index-linked funds to dump Greek bonds from their portfolio after they were downgraded to junk status by ratings agency Standard & Poor’s in June.

In Athens, riot police fired teargas at protesters chanting “Burn parliament” just hours before lawmakers were to begin debating a sweeping pension reform to help tackle the country’s huge debt crisis. About 10,000 people took part in marches across Athens during a nationwide strike - well down from the 50,000 in the biggest demonstration against austerity measures needed to secure a EUR 110 bln bailout from the European Union and the IMF. “Burn parliament! Burn parliament!” a group of about 150 black-hooded youths shouted as they threw sticks, stones, bottles and petrol bombs at police guarding the building in central Athens.

Police fired teargas to disperse most of the crowd protesting during the fifth joint strike called by public and private sector unions this year. Banks and local media were shut, hospitals operated with emergency staff and public offices were mostly closed. Businesses in central Athens rolled down their metal shutters but many elsewhere were open as usual." source