LONDON — European stock markets lost more ground on Tuesday as Greece prepares for a snap referendum on Sunday that will likely determine whether the debt-laden country will remain in the euro zone.
The CAC 40 in Paris led the downturn, falling 1.2 percent to 4,812.91, followed by the DAX in Frankfurt, 1.1 percent to 10,961.68 and the FTSE 100 in London, 0.9 percent to 6,558.60. Milan’s FTSE MIB was down 0.4 percent to 22,480.95.
The euro traded at $1.11 while the pound fetched $1.57 and the Swiss franc equaled $1.07 at 11:30 a.m. CET.
Retail and luxury stocks were mostly down, with the morning’s biggest fallers including Jimmy Choo, 2.2 percent to 1.58 pounds; LVMH Moet Hennessy Louis Vuitton, 2.9 percent to 158.85 euros; Salvatore Ferragamo, 2.2 percent to 27.33 euros; and Hermès, 3 percent to 341.35 euros.
Among the few stocks that gained ground were Boohoo.com, 2.5 percent to 0.26 pounds; Geox, 0.7 percent to 3.42 euros; and Gemfields, 1.3 percent to 0.61 pounds.
Greek voters will take to the polls on Sunday in a last-minute referendum called by the prime minister over the question of the country’s debts – and the terms of repayment.
Prime Minister Alexis Tsipras is urging the electorate to vote “no” to the terms of the bailout offered by the country’s main creditors – the European Union and the International Monetary Fund. He believes that more austerity will kill any hope of economic recovery and further humiliate the country.
Creditors are instead plumping for a yes vote, that would allow Greece to accept their bailout terms and avoid defaulting on its loans. The referendum is widely seen as a “yes” or “no” vote to remain in the euro zone, as well as a vote of confidence in Tsipras and his government.
Writing in Britain’s Daily Telegraph on Tuesday, columnist Allister Heath laid out the post-referendum scenarios.
With a yes vote “the government will collapse and the European Union will have once again succeeded in removing a government it doesn’t like. If Greece votes no, it will be out of the euro, at least in practice, this time next week. A new currency will be issued, and it will immediately start to depreciate against the euro.”
The corporate sector will suffer, the banking sector will collapse, strikes will ensue, key utilities will stop working and “triggering all-out social and economic chaos.” Heath added that the middle classes will suffer the most. “These are grim days indeed for Greece,” he added.