World stocks dropped on Monday as investors grew carefully ahead of a vital European Union summit later this week, where leaders in Greece will attempt to renegotiate some terms of the country’s international bailout. Pessimism among the investors about the state of the world economy prevailed as leaders in France, Germany, Spain, and Italy agreed over the weekend to push for a growth package worth up to 130 billion euros, or $163 billion at the European summit scheduled for June 28-29 in Brussels.
In a market commentary, Cameron Peacock of IG Markets in Melbourne said, “This week’s big event is undoubtedly the EU summit – yet another one. There have been many such events over the last two years, each of which has failed to deliver anything other than disappointment and confusion. There is absolutely no reason to expect this one to be any different.” The summit is aimed at kick-starting the economy and safeguarding the 17-nation euro currency bloc and will also prove a key test of Greek leaders’ pledges to loosen the terms that the country agreed to in order to garner a huge financial aid package to relive them of bankruptcy. The new Greek government said it would seek to repeal some taxes, stop layoffs, and extend a deadline for tough austerity measures by two years.
