Athen's ATG index was down by 6.5 per cent during early trading on Monday following a fall of 5.9 per cent before the weekend. The dialogue between Greece and its EU creditors has become increasingly strained recently, with an EU spokesperson said that "significant gaps" still remained in negotiations, despite some positive inroads being made. As a result, Greek stocks took a hit on Monday morning with the Athens Stock Exchange FTSE Banks Index dropping 12 per cent. The National Bank of Greece fell 10.6 per cent and Bank of Piraeus tumbled 15 per cent.
Across the Eurozone investor fears of a default and a potential Greek exit from Europe had a similarly negative effect on shares, especially in the peripheral Eurozone countries.
By the end of June, cash-strapped Greece needs to pay a €1.5bn loan owed to the International Monetary Fund (IMF) and show evidence of an economic reform pathway in order to qualify for a bailout package worth €7bn.
VAT, pensions and a primary budget surplus target for 2015 and 2016 are among the issues that are yet to be resolved between Greece, the IMF and the EU. One senior official participating in the talks said that a compromise remained achievable albeit unlikely.
Yannis Dragasakis, Deputy Prime Minister of Greece and head of the negotiating team in Brussels said that Athens is ready to complete talks, instead pointing the finger at Greece's creditors for being resolute in their demands for pension cuts and increases in the nation's VAT, which the Greek capital feels will put too much strain on key services.