A sudden deterioration in Greece’s debt crisis shook global markets Monday.
Stocks around the world tumbled after a weekend breakdown in negotiations between the Greek government and its creditors left the country teetering on the brink of default and pushed it closer than ever to an exit from the eurozone.
Still, there was little sign of outright panic in the market. European stocks recovered slightly from early losses. Bonds in Italy, Spain and Portugal—highly indebted countries seen as vulnerable to the Greek crisis—also pared losses after initial sharp falls.
Greece has shut down its banking system for six days and imposed capital controls after the European Central Bank opted not to expand a lifeline of emergency funds. Charles Forelle assesses whether a bailout deal is still possible.
The Stoxx Europe 600 was down 2.4% midway through the session, wiping out most of the previous week’s gains on optimism that a deal would be done. Greece’s stock market will remain closed this week along with the country’s banks.