Spain tumbled into recession and European stock markets and the euro fell Thursday as Greece installed a crisis government to tackle its crippling debt, EU leaders prepared for talks and analysts raised the spectre of a run on eurozone banks.
“Markets are worried about eurozone bank deposit runs and an escalating banking crisis,” London-based VTB Capital economist Neil MacKinnon told AFP.
Heavy withdrawals of deposits have been reported in Greece and Spain, and top European Union leaders were to hold a videoconference.
They were initially to discuss an upcoming G8 meeting of industrialised countries but were now faced with a serious deterioration of the situations in Greece and elsewhere across the eurozone.
A caretaker government took office in Athens on Thursday to organise its second election in six weeks after an inconclusive May 6 vote as fears over its possible euro exit rocked Spain and Italy.
The election left Greece in limbo and the new poll on June 17 offers no guarantee of a viable government able to implement an EU-IMF bailout which has divided the country.
The International Monetary Fund announced Thursday that it would hold off on official contacts with Greece until after the June 17 elections.
CONTINUED at Yahoo News.