Greek elections won't derail bailout, says EU, as Syriza splits - as it happened
Commission says it expected Alexis Tsipras to call snap elections last night
- Latest: Brussels wasn't surprised by resignation
- Greek left-wing MPs form new party
- Slovak finance minister chides "cynical" Tsipras
- Fitch warns of risks to bailout
And in the markets:
- Global markets slide on China and Greek fears
- Footsie 100's fall continues
- Shanghai stock market tumbles 4%
6.20pm BST
It has been a traumatic day - and indeed week - for global stock markets, and investors shied away from shares amid growing fears about the outlook for the Chinese economy.
These worries accelerated after poor manufacturing data from the world's second biggest economy.
6.01pm BST
Back with Greece:
Unsurprisingly, Deputy PM Dragasakis has dismissed a New Democracy proposal that he should lead unity gov't from current Parl't #Greece
5.31pm BST
Former Greek finance minister Yanis Varoufakis has said he would not be on the Syriza ticket in the forthcoming elections, maintaining "we betrayed the majority of the Greek people."
A Greek Reporter story has the comments, made in an interview with French magazine Nouvel Observateur just before Alexis Tsipras called the new ballot:
Varoufakis [said] that "he will not be a candidate of a party that would aim to implement the July 13 decision, even if this party has wide acceptance among Greek people."
The former Finance Minister said he opposed the decision Prime Minister Alexis Tsipras took to accept the proposals of Greece's international creditors on July 13. According to Varoufakis, upon returning from the Euro Summit, Tsipras set a specific dilemma: Either we accept this agreement or the Wolfgang Schiuble plan for the country's exit from the euro is implemented.
"It is in this dilemma that my disagreement with Alexis Tsipras lies," he said. "I personally believe that the acceptance of the third Memorandum is essentially the starting point for the country's exit from the euro."
Asked whether he will remain politically active, Varoufakis said that he will, whatever happens. He said that the questions of the Greek debt and austerity should be addressed on a European level. They should be addressed through the people and their representatives and not through the Eurogroup. He said there should be a European movement for more democracy in the Eurozone.
5.04pm BST
Investors have been running for the hills ahead of the weekend, with leading markets all recording major falls. China's decision to devalue the yuan earlier this month set off concerns about the outlook for the world's second largest economy and sent its market sharply lower. Since then China's economic data has been poor, with disappointing manufacturing figures earlier proving the latest reason for investors to bail out.
On top of that there is uncertainty about when the Federal Reserve will raise US interest rates, with this week's minutes just adding to the confusion. Worse than expected US manufacturing PMIs from Markit suggested a rate rise in September may now not happen, but markets have been unsettled by the lack of clarity.
4.14pm BST
Here's a snapshot of the current state of play among major markets (and it's gloomy):
4.00pm BST
Another German warning that the Greek agreement has to stand despite the forthcoming elections, this time from Jens Spahn, a deputy to finance minister Wolfgang Schiuble:
Our ESM agreement is one with #Greece, not with Syriza. So there is no doubt that the reforms have to be implemented as agreed and on time.
3.52pm BST
The market sell-off is gathering pace.
On Wall Street the Dow Jones Industrial Average is now down 216 points or 1.2%, while the FTSE 100 is on course for its worst weekly performance this year, off 125 points or nearly 2%. Connor Campbell, financial analyst at SpreadEx, said:
Nothing really happened this afternoon to inspire the widening of losses, beyond the already sign-posted dismal US open and a weaker than expected US flat manufacturing PMI. Perhaps investors aren't too keen on carrying any risk into the weekend, with the threat of more Chinese instability constantly looming over the markets. That manufacturing miss for America merely helped cast more doubt on a September rate hike, and caps off a string of inconsistent data and mixed messages this week. The preliminary second quarter GDP next Thursday could provide the markets with a bit more clarity, but if the Chinese drag continues the figure could get lost in another wave of negative trading.
3.39pm BST
European consumers may be slightly more confident according to the latest sentiment figures but they remain realistic, says ING Bank's Bert Colijn, as low oil prices vie with problems in Greece and China:
Consumers in the Eurozone regained some confidence in August, after a drop in July amidst the Greek crisis (confidence up to -6.8 from -7.1 last month). The fact that the bounce back was small indicates that consumers continue to be less certain about the direction of the economy than they were in the first months of the year. As turmoil in China and Greece continues to make concerning headlines, the labour market improves only slowly and growth in the Eurozone does not accelerate as it did at the end of last year, consumers are showing some realism. That does not mean that consumers are now downbeat, they are still more confident than in 2005 and 2006, which were strong years of economic growth. Even though the global environment remains turbulent, European consumers do see moderate improvements in their personal situation and the European economy around them.
The current levels of confidence indicate a continued moderate recovery of consumption. The upward trend in consumption has leveled off a little in the second quarter, which coincided with declining consumer confidence. As mentioned before though, current levels of confidence are far above long-term average and remain close to the 2007 peak. This means that growth in consumption is likely to continue in the coming months, but a continuation of the acceleration seen in the beginning of the year seems unlikely. One factor that does contribute positively to the consumption outlook is the recent drop in oil prices. Oil currently trades at $45 a barrel, pushing down prices at the pump. This means that consumers again experience a boost in spending power, which could spur consumption in the months ahead.
3.11pm BST
3.05pm BST
Eurozone consumer confidence has increased slightly from July to August, but is still in negative territory.
It improved from -7.1 to -6.8, according to the European Commission. The forecast was for -6.9.
2.54pm BST
Markit's Tim Moore added:
According to survey respondents, the strong dollar continued to put pressure on export sales and competitiveness, while heightened global economic uncertainty appeared to have dampened client spending both at home and abroad. Alongside this, manufacturers of investment goods widely cited growth headwinds from the slump in capital spending across the energy sector.
2.50pm BST
Growth in US manufacturing came in lower than expected, according to an industry survey, casting fresh doubt on when the US Federal Reserve will raise interest rates.
The Markit preliminary manufacturing purchasing managers' index fell to 52.9 in August, compared to a final July reading of 53.8 and expectations of 54.
August's survey highlights a lack of growth momentum and continued weak price pressures across the US manufacturing sector, which adds some fuel to the dovish argument as policymakers weigh up tightening policy in September.
2.36pm BST
Wall Street has, as expected, followed the global market sell-off and fallen sharply in early trading as fears of a slowdown in growth gain ground.
The Dow Jones Industrial Average is currently down 170 points or 1%, with European markets also heading back down to their lows of the day.
2.28pm BST
The Dutch have joined in with the theme that the Greek bailout deal stands despite Alexis Tsipras calling a general election:
Dutch PM Rutte: Greek agreements stand regardless of who is governing --BBG
2.11pm BST
The latest developments in Greece show the risks to the country's bailout agreement, says ratings agency Fitch. In a new report it said:
The snap Greek general election highlights the risk that uncertainty in domestic politics and future relations with official creditors pose to the success of the country's third bailout programme...
A September election would occur before the first programme review in October and may well hamper and delay the technical work and political decisions necessary for its completion. Relations with creditors appear to have improved in the run-up to the bailout agreement on 14 August. But the likely pause in legislating for reforms during the election campaign coming so soon after the agreement was concluded may rekindle or reinforce some creditors' concerns about Greece's ability to meet the programme's requirements.
1.50pm BST
Investors should keep a very firm eye on Greece over the next few weeks, says Ian Forrest, investment research analyst at The Share Centre.
"With the formation of a new party comprised of rebel Syriza MPs, the outcome of the election is highly uncertain.
Although Tsipras remains popular, there is a possibility that the emerging government may be more left-wing and opposed to the reforms and austerity measures agreed in the bailout deal. Investors should note that this is likely to weaken the Euro and lead to further market volatility until the outcome, and the implications for Greece's economy are known."
1.15pm BST
1.00pm BST
Vowing to end austerity and overturn Greece's bailout deals drove Alexis Tsipras to power in January. Now, Panagiotis Lafazanis appears to be aiming to repeat the trick this autumn.
He says his left-wing Popular Unity party will offer a "realistic alternative" to the deal drawn up with creditors.
Lafazanis declares new party's goals to cancel bailout, write down debt http://t.co/OC5Gy6xxzO pic.twitter.com/5p7OHOPkge
12.36pm BST
Popular Unity believes that Greece must make a 'planned exit' from the eurozone, Lafazanis continues:
"Popular Unity" Lafazanis: In order to apply our program, we are to exit the Euro-Zone, with a plan. The world outside EZ is not hell.
12.34pm BST
The head of Greece's newest political movement has swiftly challenged Alexis Tsipras, and vowed to run on an anti-bailout ticket.
Panagiotis Lafazanis says that the MPs who split from Syriza to form Popular Unity will harness the energy of the No campaign, who won last month's referendum on Greece's bailout.
Lafazanis: 25 MPs from #Syriza who have not forgotten their original mandate and commitment to the people formed Popular Unity #Greece
Lafazanis: The #Greferendum's No will be heard again. That No was translated into Yes, by the government but does not represent the people.
12.21pm BST
The left-wing MPs who broke away from Syriza this morning to form the anti-austerity Popular Unity movement are holding a press conference now:
First press conf of new party "Popular Unity" #Greece #elections pic.twitter.com/aVCK07yHXe
New party's "People's Unity" leader Lafazanis is now giving his first Press Conference. #Greece #electionsgr2 pic.twitter.com/CHvoojfKfC
12.19pm BST
I sense a trend forming.
Germany's government has told reporters that it, too, wasn't shocked by Alexis Tsipras's resignation last night and doesn't expect the bailout programme to be affected.
"The move from Prime Minister Tsipras is not surprising.
Of course the government, as well as Greece's other European partners, expects the agreements that are in this programme to be implemented," he said.
11.52am BST
Back in Athens, the leader of the right-wing New Democracy party, Vangelis Meimarakis, is meeting the left-wing parliamentary speaker, Zoe Konstantopoulou.
They're discussing whether a unity government could be created, to avert elections next month.
Opposition leader #Meimarakis meeting with Parliament speaker #Konstantopoulou in efforts to form government. #Greece pic.twitter.com/aGUE77vIh0
11.41am BST
The European Commission has revealed that it wasn't surprised that Alexis Tsipras's decision to resign last night.
Commission refusing to say whether it knew about Tsipras's plan to resign before or after it agreed bailout.
The Commission respects the decision of prime minister Tsipras to go to the polls swiftly.
For us this was not a surprise, following the repeated phone calls between president Juncker, prime minister Tsipras and president Pavlopoulos. We expected it.
Reforms have been decided on by the Greek government and voted on by the parliament. They can be implemented now.
@EU_Commission not surprised by resignation @tsipras_eu says @A_Breidthardt, not divulgng when it learned about his plans
11.17am BST
August has been a month to forget for Australian cricketers touring England, and also for investors back home.
The benchmark ASX200 posted a 1.3% decline today, extending its recent losses. And that leaves the index facing its worst monthly fall since the global financial crisis.
Related: Australia shares on course for worst month since height of financial crisis
10.57am BST
European stock markets are now clawing their way back from their lowest points.
The bounce-back follows new manufacturing data from the eurozone, which shows output grew at a steady rate in August.
10.54am BST
The FTSE 100 has recovered from its early slide, and is now trading around 35 points lower, a drop of 0.5%. That's still its lowest level since January, having hit an eight-month low earlier.
Brenda Kelly of London Capital Markets explains:
The FTSE looks set to put in its worst week since mid-December of last year with futures dropping as low as 6205 prior to the open but has since recovered off these lows aided and abetted by some of the major precious metal producers who continue their rebound on the back of the surging gold price.
Defensive stocks, most notably the UK supermarkets are also catching a bid in early trade.
10.34am BST
10.21am BST
Slovakia's finance minister has accused Alexis Tsipras of acting cynically by seeking snap elections last night, on the day Greece received its first tranche of bailout money:
We respect Mr. Tsipras decision, but I can't help feeling it's a bit cynical timing to do it immediately after the 1st disbursement #Greece
Nevertheless, we have to believe that any Greek govt to come will implement what was agreed. It's the most important thing #Greece #eurozone
9.41am BST
The sharp selloff in Asia has pushed Hong Kong's index into bear market territory.
The Hang Seng index fell 1.5% today, the sixth daily fall in a row, to close at its lowest level since May 2014.
"Uncertainty about China growth is now the main swing factor in markets. Today's data reinforced the doubts about global growth."
9.19am BST
Alexis Tsipras's resignation last night has hit the Greek stock market this morning.
The index of 20 largest shares in Athens fell 2% in early trading, with bank shares down around 3%.
9.15am BST
Here's a list of the left-wing Greek MPs who have just broken away from Syriza to form their own party.
25 ex-Syriza Popular Unity MPs. V/@protothema. Will add them to my Syriza rebel MP spreadsheet http://t.co/yBtnCByJZw pic.twitter.com/M2rY1tus0x
It is the font of choice for all serious political players. Nothing says "I mean business" like Comic Sans #Greece https://t.co/GlGAUBNPv3
9.05am BST
The head of Greece's largest opposition party, New Democracy, has just been handed the three-day "mandate" to form a new government:
ND pres Meimarakis officially receives mandate from President Pavlopoulos to form government https://t.co/nai4iFFSP4 #Greece
8.46am BST
Breaking away from the markets... there are important political developments in Greece.
Twenty five far-left members of the Syriza party have just broken away to form their own party.
New party of SYRIZA rebels (Popular Unity) will be led by ex-Energy Minister Lafazanis. Doesn't incl parl't speaker Konstantopoulou #Greece
It's official: Left Platform split from Syriza, form own parliamentary group and party named Popular Unity. End of a 20+ year era. | #Greece
8.40am BST
Chinese authorities appear to have intervened to prop up the Shanghai stock market, in the last few minutes of trading:
Victory for Beijing! Shanghai Comp's "floor" defended in final minutes, writes @patrickmcgee_ http://t.co/Z6t7HKbUl8 pic.twitter.com/cssnSxAXsM
8.36am BST
China's stock market has suffered another bad day.
The Shanghai Composite index just closed, down over 4%, in a nervy selloff after factory activity fell at the fastest rare since the crisis began.
#China rout deepens: Shanghai Comp closes 4.2% lower at 3507.74 after horrible econ data. PMI at lowest since GFC. pic.twitter.com/pV1B2ycQ8L
8.33am BST
Selling in May and going away would have been an excellent trading strategy this year.
Britain's FTSE 100 has fallen more than 11% since hitting its record high in April, to hit its lowest level of 2015 this morning:
8.22am BST
The latest political turbulence in Greece is also hitting stock markets, says Augustin Eden of Accendo Markets:
He blames:
....further deterioration of the Chinese growth outlook (dire manufacturing data overnight) and political turmoil in Greece that continues to hamper investor sentiment.
Greek PM Tsipras officially resigned last night, with snap elections slated for 20 Sept and endorsed by the EU.
8.21am BST
Technology firm ARM Holdings is the biggest faller on the FTSE 100 index this morning.
ARM's semiconductors are used in billions of mobile devices, so it's vulnerable to a slowdown in emerging markets such as China.
8.10am BST
Markets sharply down at the opening - FTSE -68 points, DAX -185, CAC -61 - resources, banks and oils still head south - down k1.5-2%
8.05am BST
And we're off!
The FTSE 100 has shed 1.3% at the start of trading in the City.
7.59am BST
A weakening global economy means less demand for energy. And that's why the price of oil has fallen by around 1% this morning.
Brent crude, sourced from the North Sea, has dropped to $46 per barrel, the lowest since January.
Oil is on course for the longest weekly losing streak since 1986 http://t.co/C41DxS2NIS pic.twitter.com/cgLfY9jDmR
7.55am BST
It's nearly time for Europe's stock markets to open.
Jan von Gerich, chief strategist at Norwegian financial group Nordea, sets the scene:
Equity markets plunged globally. In the US, S&P 500 tumbled by 2.11%, leaving the index at its lowest since February. Prices have continued to drop overnight in Asia, with e.g. China down by another 3%, and the weakness will extend into European markets this morning.
Core bonds have rallied, oil prices remain in free fall, while the EUR/USD is heading higher. The pressure on emerging market currencies continues.
Equity market #plunge continues globally. Forget about #Fed hikes, be genuinely worried about #China and other emerging markets.
7.47am BST
Two factors are driving today's sell-off; China's economic slowdown, and confusion over when America's central bank will raise interest rates.
Until recently, many economists had been pricing in a US rate hike next month. But some investors now believe that China's woes make that much less likely - creating fresh uncertainty. And markets don't like that at all.
Global markets are in panic mode as the full scale of China's slowdown becomes clearer and the market pricing for a Fed September rate hike is unwound.
Asian markets are a sea of red. Oil has fallen a further 1% in Asia trading today, and the word on everyone's lips is deflation - poison for equity markets. The phenomenal six-year bull market may finally meet its match in China-induced global deflation. The excess supply of commodities and the potential for further devaluations in the Chinese yuan not only make a Fed rate hike in September unlikely, but increasingly even put a December rate hike at risk.
7.35am BST
Asian stock markets went into 'panic mode' today, after China's factory sector reported a sharp slowdown, writes my colleague Martin Farrer in Australia:
China's factory sector shrank at its fastest pace in more than six years in August as domestic and export demand dwindled, a private survey showed, adding to worries that the world's second-largest economy may be slowing sharply and sending financial markets into a tailspin.
China's surprise devaluation of the yuan and heavy selling in its stock markets in recent weeks have sparked fears that it could be at risk of a hard landing which would hammer world growth.
Related: Global stocks in 'panic mode' as Chinese factory slump drags on markets
7.32am BST
Good morning.
Our European opening calls: $FTSE 6238 down 130 $DAX 10107 down 325 $CAC 4666 down 117 $IBEX 10293 down 294 $MIB 21798 down 581
"Markets are pricing in the worst right now."
Friday's @CityAM front page as Tsipras resigns and triggers election. pic.twitter.com/fr9Sa6Ki1h
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