Global stocks plunge over possible Greece exit from eurozone

Global stocks were down at a four-month low yesterday on worries over the fallout of a possible exit by Greece from the euro zone, while concerns rose over China's move to prop up lending that signalled a key driver of world growth was weaker than previously thought.

Data pointed to a deeper European recession, which, coupled with growing worries about the Greek debt crisis, weighed on European shares which went down 2 per cent to their lowest levels in more than four months. Wall Street saw stocks hit a three-month low before recovering some losses.

Government debt gained, pushing German yields to record lows, following coalition talks faltering in Greece on Sunday, which according to analysts increased the chance of a mid-June election.

A vote on 6 May left Greek political leaders divided on the country's €130 billion bailout, which saw neither side being able to form a government.

The yield on US Treasuries, which moves inversely to price, slid to the lowest level since early October, decisively breaking below 1.80 per cent, a key resistance point.

The benchmark 10-year US Treasury note rose to 15/32 in price to yield 1.78 per cent.