Sept. 12 - Growing fears of a Greek default send a hurricane through French banks and hit the euro as investor confidence in the euro zone's ability to deal with the debt crisis fades. Sonia Legg reports
Once again Greece's debts are giving investors elsewhere a headache. French bank shares fell more than 10 percent in morning trade as new worries emerged about a Greek default. Societe Generale, BNP Paribas and Credit Agricole are all heavily exposed to Greece. And ratings agency Moody's is due to announce its decision on whether any of them should be downgraded. It follows a review or banks started in June. The CAC was also down around 4 per cent in morning trade - Francoise Chaulet is co-director of Montsegur Finance. (SOUNDBITE) (French) CO-DIRECTOR AT MONTSEGUR FINANCE, FRANCOIS CHAULET, SAYING: "It's been a long time since we've been hanging around for a solution to finally clamp the Greek haemorrhage. And so long as you don't have a durable solution, the markets will imagine a scenario where we're all headed into the wall: the explosion of the euro zone." Societe Generale promised to cut costs and sell 4 billion euros worth of assets to bolster capital. But that didn't stop talk of partial bank nationalisation - a scenario dismissed by France's Industry Minister Eric Besson. (SOUNDBITE) (French) INDUSTRY MINISTER ERIC BESSON SAYING: "It seems to me to be totally premature to talk about this possibility. I remember that in 2008, at the President's initiative, the French government lent money to several industrial groups." Across Europe shares hit a 26-month low with the German DAX falling almost three percent. It dropped below the 5,000 level for the first time since July 2009. Oliver Roth is a trader in Frankfurt. (SOUNDBITE) (English) OLIVER ROTH FROM CLOSE BROTHERS SEYDLER AG. SAYING: "The mark of 5,000 is very important, psychologically very important, and chart-technically, it's a huge support and because at the end of the week we'll have the triple witch, we will face some more attacks on the 5,000 this week." Markets were partly reacting to the failure of Finance Ministers to come up with a strong statement over the weekend to help turn the world economy around. Many analysts now believe it's only a matter of time before Greece will have to default. Sonia Legg, Reuters.