near-four month low, its decline testament to one of the important factors hampering the broader market of late.
Investors have reached their desks on Monday with the news that politicians in Greece have failed once again to agree a coalition government. This has increased the likelihood -- according to polls -- that the election in June may deliver a government that will cancel the IMF-EU bailout agreement, renege on debt repayments and possibly cause Greece to be forced out of the euro.
Traders are uncertain what impact such turmoil could have on the political and economic climate of the continent. Though clearly negative, the question for investors is how much this worse case scenario may have been discounted by the market.
The other worry is how much the Athens shenanigans will infect sentiment towards other fiscally strapped eurozone nations. The market will have an eye on an auction of Spanish sovereign debt later in the week. In the meantime, the bloc's debt sector is showing signs of stress, with Spain's benchmark 10-year yield up 8bp to 6.08 per cent.
One factor that was initially proving mildly supportive to risk assets was Beijing's move to encourage lending by China's banks. Early gains for Chinese stocks have been lost, however, and the the Shanghai Composite is down 0.4 per cent as investors realise that such a move by the central bank is only deemed necessary because of the recent slowdown in growth in the world's second-biggest economy.
"We consider this policy move as a response to the weaker than expected April economic and new loan data," analysts at Deutsche Bank said.
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