France’s CAC 40 fell sharply until mid-morning hitting a low of around 4800 then shot back up to 4840 in the space thirty minutes before begining to slide again.
It was a very similar story for Germany’s DAX index. It fell to around 10900 by mid-morning then rebounded sharply to over 11000, and then started going back the other way once more.
The pattern was replicated elsewhere around Europe, including the IBEX 35 in Spain.
The big swings appear to be driven by the uncertainty as to whether Greece will reach a deal with Germany and others on providing fresh loans to its banks before they run out of funding and the country defaults on its obligations.
“Germany’s rejection of Greece’s loan extension is hardly surprising as the two countries haven’t had the most cordial relationship lately,” said David Madden, IG market analyst. “Greece was never going to get emerging funding for its banking system and a no-strings-attached loan extension in quick succession.
“The game of cat and mouse between Germany and Greece continues, and the debt-stricken nation will have to compromise in order to get assistance from the ECB. The eurozone equity market is being held back by the developments in Greece and will remain offside until a deal is brokered,” Madden added.