(MENAFN- Gulf Times) The euro slumped to an 11-year low against the dollar yesterday after anti-austerity party Syriza won the Greek election, sparking fears the country could end up exiting the eurozone.
In Asian trading, the European single currency dived to $1.1098 € the lowest level since September 2003. It later recovered in European trade to $1.1283, up from $1.1208 late in New York on Friday.
Greece awoke to a new era of defiant anti-austerity after voters handed a decisive victory to radical left party Syriza, putting the country on a collision course with the EU and international creditors over its bailout.
Yet European stocks nevertheless rose.
"The Greek election results were no surprise and were largely priced into markets and alongside improving German business confidence data enabled the German benchmark DAX stock index to start the first full week of life with quantitative easing in the eurozone at fresh all-time highs." said analyst Jasper Lawler at CMC Markets UK.
Frankfurt's DAX 30 index jumped 1.40% to a new record close of 10,798.33 points, aided by the Ifo institute's closely watched business climate index, which rose to 106.7 in January from 105.5 points in December.
That was the third monthly rise in a row and was slightly higher than analysts' expectations.
Meanwhile in Paris the CAC 40 climbed 0.74% to 4,675.13 points, Madrid rose 1.08% and Milan gained 1.15%.
Not directly benefitting from the European Central Bank's plan to inject over ‚¬1tn of stimulus into the eurozone economy, London's FTSE 100 rose 0.29% to 6,852.40 points.
However the main stocks index in Athens dived 3.2% after Syriza and its 40-year-old leader Alexis Tsipras won 149 seats in the 300-seat Greek parliament, just two short of an absolute majority, with most votes counted.
But there was no spike in the yield on Greece's long-term government bonds, an indication of its borrowing costs. The rate of return on 10-year Greek government bonds was at 9.094% late yesterday, up from 8.410% on Friday.
Syriza campaigned hard on renegotiating the EU-IMF bailout that imposed strict spending and taxation rules on Athens.
The possibility of Greece defaulting on its debt repayments could spark renewed fears the country could be forced to leave the eurozone.
"Syriza's campaign, based on abandoning Greece's budget constraints and negotiating a write-down of Greek debt, enhances the chances of an exit from the eurozone unless a compromise is reached," said analyst Amir Khan at dealer firm CurrenciesDirect.
"The US dollar continues to remain the strongest currency in the wake of economic and political tensions elsewhere."
Myrto Sokou, an analyst at Sucden Research, said that "following the Greek election's results, the euro came under heavy pressure initially and tested an 11-year low at 1.1098 against the US dollar but rebounded strongly above 1.1250."
The single currency had also hit 11-year dollar lows last week after the ECB unveiled its 1.14tn euro ($1.27tn) bond-buying programme to stimulate growth and combat deflation.
However, the stimulus fired global stock markets higher late last week.
US stocks edged up yesterday, with the Dow Jones Industrial Average showing a gain of 0.02% at 17,675.46 points in midday trading.
The broader S&P 500 added 0.10% to 2,053.96, while the Nasdaq Composite rose 0.14% to 4,764.50.
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