Greece: Stock market rallies after PM calls early election

Greek markets reacted positively Monday to Prime Minister Alexis Tsipras' call for snap general elections following a resounding defeat of his left-wing Syriza party in European and local elections.

Official results with more than 87% of the vote counted showed the conservative New Democracy party 9.4 percentage points ahead of Syriza, with just over 33%, compared to the governing party's nearly 24%.

Speaking Sunday after early results showed a heavy defeat for Syriza, Tsipras said he would visit Greece's president after the second round of local elections on June 2 to request the early dissolution of parliament, triggering early national elections. The likeliest dates are June 30 or July 7, about three months earlier than Tsipras' term expires in October.

"The electoral result .... is not up to our expectations," Tsipras said. "I will not escape or run away, or quit the fight."

The development lifted some of the uncertainty that had gripped the country in the run-up to Sunday's ballots, and markets reacted with relief. The stock market opened up 5% and made further gains during the day to close up 6.1%. Greek government bonds were trading sharply down, with yields tumbling to 3.03%, compared to 3.36% on Friday, before increasing again slightly to 3.16%. High bond yields indicate distrust in a country's ability to repay its debt.

The outcome of Sunday's European, local and regional elections was a blow to a party that rose to prominence in 2015 on promises of repealing austerity imposed during Greece's international bailout, but ended up imposing more. Syriza also suffered heavy losses in northern Greece, where anger ran high over a compromise reached with neighboring North Macedonia over that country's name.

Tsipras recently brought a series of relief measures to parliament that amounted to handouts and defied the conservatives to vote against them. They did not, but accused Tsipras of a desperate last-minute gambit for votes.

"For four years now we've run a course with unprecedented difficulties for the country's political history. We went against the current," Tsipras said Sunday. "We didn't hide. We told the truth to the Greek people. We will tell the truth now too."

He described the choice Greeks face as one between emerging permanently from the bailout or "returning to the darkness of austerity, the darkness of the crisis, of the oligarchs and the International Monetary Fund."

On the streets of Athens, feelings were mixed. Some hoped early elections would put an end to the uncertainty affecting business.

"It was the best thing for Greece, I believe, because since January there was no work at all. And that's very bad," said Paraskevas Stamatiadis, an Athens goldsmith. "Let's get elections over with."

Among other heavy losers on Sunday' were Syriza's former governing coalition partner, the right-wing Independent Greeks, and Greece's extreme right-wing Golden Dawn party. The Independent Greeks saw their support plunge to 0.8% from nearly 3.5% in 2014, putting them in 15th place.

Golden Dawn shed more than 4 percentage points, leaving them in fifth place with slightly under 5%, down from over 9% in the 2014 European elections. That would still give them two seats in the European Parliament, down from three.


Theodora Tongas in Athens contributed to this report.