(Reuters)
(Reuters) World markets were down on Wednesday (July 8) as investors worried about Greece’s debt crisis, a meltdown in Chinese markets and a slump in commodities.
Euro zone leaders on Tuesday (July 7) gave Athens until the end of the week to come up with proposals for reforms in return for loans.
Without the aid, Greece is likely to crash out of Europe’s single currency bloc.
Markey analyst Chris Beauchamp said but a solution on Greece appeared to be close.
“The rhetoric coming out of Europe and also coming out of Greece, suggests that we will have a deal or a decision to eject Greece from the euro zone by Sunday evening,” Beauchamp said.
“You don’t summon the entire euro zone and indeed the non-euro zone countries to Brussels without a reason on Sunday and that would suggest that it is the big event, it is the last moment for Greece to stay within the currency union,” he added.
European trading got off to a steady start on Wednesday, even though stocks had plunged 6.75 percent in China, where the country’s regulator warned investors were being gripped by “panic sentiment”.
Carsten Brzeski of ING said China needs to transform their economy to depend more on domestic demand.
“The problem of the Chinese economy right now is that they still have not managed to successfully transform their economy from an export-driven economic model towards a more balanced economic model, a model which depends more on domestic demand,” Brzeski said.
“The loss of economic wealth of course means that there will be less demand for European products to be bought in China. So it’s not only a stock market issue, but it will become a real economy issue, both for China and for Europe. So what is happening in China, I think that we’ve seen really a normal bubble, which is now deflated or which is even bursting,” he explained.
Beijing has taken a series of steps to stabilise its turbulent markets in recent weeks, but with little success so far.
