Markets down as eurozone rejects Greek austerity plans

The Greek government earlier this week put forward a €3.3bn (€2.8bn) package of cuts in a bid to secure a second bailout of €130bn aimed at preventing the nation from defaulting on its debts.

But eurozone ministers last night demanded a further €325m of cut’s in this year’s budget, sending stocks and the euro down.

The FTSEurofirst 300 was down 0.5 per cent as at 8.20am losing gains made yesterday, while the FTSE 100 was down 0.4 per cent.

The euro fell from a two-month high of $1.3322 reached yesterday, to trade down 0.2 per cent at $1.3250 on Friday morning.

Greece’s lenders also warned of more intensive involvement in the Greek economy to improve tax collection and accelerate the sale of state-owned assets.

Luxembourg prime minister Jean-Claude Juncker (pictured), who is currently head of the eurogroup, said if the conditions were met, then finance ministers would reconvene on Wednesday to sign the loan agreement.

This wlll set in motion a private sector bond swap that is expected to cut €100bn from Greece’s €350bn debt pile and help restore its finances, while also involving a 70 per cent ‘haircut’ for private bondholders of Greek debt.