The benchmark S&P/ASX 200 index declined 0.5 per cent to 4263.10, with week-to-date gains now at 0.4 per cent after the index advanced yesterday.
US stocks ended higher overnight after investors applauded the Greek parliament’s move to approve unpopular austerity measures in the face of violent protests in the country.
Passage of the austerity bill put Greece one step closer to obtaining fresh bailout funding from institutional lenders and avoiding a hard default in March.
However, the path to side-stepping default is unlikely to be smooth given there are a number of steps still to be taken, including finalising private sector involvement in the bailout. At the same time, eurozone finance ministers are tomorrow expected to discuss approval for the funds at a special meeting.
A Financial Times report suggested the bailout funds may be approved on a conditional basis only, as some eurozone countries remain sceptical about Greece’s ability to implement its austerity budget, and another meeting may take place next week.
Meanwhile, in a reminder that Greece is not the only European country with debt difficulties, Moody’s lowered ratings on Italy, Portugal, Slovakia, Slovenia and Malta by one notch and cut Spain’s rating by two notches today.
The ratings firm also cut the outlook on the UK, France and Austria to negative.
Moody’s said that it made the changes to reflect the susceptibility of these countries to “the growing financial and macroeconomic risks emanating from the euro area crisis”.
The Australian dollar traded at $US1.0716 after the downgrades, from $US1.0743 in late North American trading yesterday.
Miners were retreating in Sydney along with most commodity futures in electronic trading, with Newcrest Mining down 1.4 per cent and Rio Tinto falling 0.8 per cent.
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