Greece takes measures to stop speculators as debt crisis escalates.

The troubled country triggered a sell-off in global markets after its debt was yesterday slashed to junk status, making it harder to pay down its deficit and raise money to fund its budget.
Concerns that the situation could have repercussions across Europe were heightened by a cut in the credit rating of Portuguese government debt.

Vince Cable, the Liberal Democrat Treasury spokesman, warned that unprecedented levels of Government borrowing meant that Britain itself had become exposed.

"The Greek position is much more serious but is a salutary warning that unless the next government gets seriously to grips with the deficit problems, as we're determined to do, we could have a serious problem," Mr Cable told Reuters Insider television.

"It's worth reflecting that Greece and Britain have one thing in common: they have one-party governments that haven't carried the public with them, and that's one danger that I think we need to be mindful of going into this election."

This morning, the Greek regulator banned speculators from shorting the Athens market – trying to make money from betting shares will fall further – after widespread selling which saw London's FTSE 100 tumble 2.6pc, Germany's DAX 2.7pc, and France's CAC 3.7pc.

This spread to New York where the Dow Jones dropped 1.9pc before moving to Asia, where Japan's Nikei index and Hong Kong's Hang Seng fell 2.5pc and 1.2pc respectively.

The sell-off continued in Europe in early trading after an uneasy halt as investor took stock as markets opened. Major markets in London, German and France were down around 1pc.

Southern European markets were hard hit, with Portugal tumbling 6pc and Spain 3pc.
Lorraine Tan, director of equities research at Standard & Poor's in Singapore, said "The fear is that Greece and Portugal are just the appetisers.

"The concern is it is going to spread and have an impact on the financial system and ultimately on the economy."
As a further indication of investor jitters, the premium being demanded to hold Greek government bonds jumped to its highest since late 1996.

ASIAN MARKETS, OIL FALLS
The worsening European debt crisis rattled Asia, as stock markets across the region fell and oil slid to near $82 a barrel.

Tokyo's Nikkei-225 index was down 287 points, or 2.5pc, by lunchtime at 10,924.75 points, while Hong Kong's Hang Seng index fell 260 points, or 1.24pc, to 20,998 points.
South Korea's Kospi index fell 1.2pc to 1,728.25 while the losses were more restrained in Shanghai, which dipped 2.32 points to 2906.
Concerns about Europe, which remains the largest market for Asian exports, increased after Standard & Poor's, the rating agency, downgraded Greece's debt to junk status and hit Portugal's rating with a two-notch cut.
The concerns about Europe overshadowed a strong set of earnings from Japanese companies, showing a fragile recovering is under way in Tokyo.

OIL TRADERS EYE EUROPEAN WOES
Meanwhile, US crude oil for June delivery fell 27 cents to USD82.17 a barrel, touching a $2 drop over its last two trading sessions.

Analysts said oil traders were taking note of a possible economic crisis in Europe and that the market had reacted to new inventory figures from the US, which showed that stockpiles were up 5.3m barrels in the week ending April 23.

"Market sentiment remains fragile and there is a possibility that if we have more adverse economic news we could see prices decline further," said David Moore, an analyst at the Commonwealth Bank of Australia, adding that US demand for oil was weak.

Source: www.telegraph.co.uk