CSE Falls 2.7% On Greek PM Resignation Reports

The Cyprus Stock Exchange fell 2.7 percent to 352,55 on reports that Greek Prime Minister George Papandreou is set to resign amid a new crisis over a Greek sovereign debt referendum.

Bank stocks took the brunt - Bank of Cyprus fell 5.2 percent and Marfin Popular Bank fell 3.9 percent by mid-afternoon trading.

The beleagured leader is in a crisis meeting with his cabinet of ministers, the second in 48 hours. The rumour that Papandreou may resign has been denied by his chief of staff, reports Reuters. However, New Democracy leader Nikos Samaras wants an interim government to finalise the October 27th agreement and snap elections, according to Greek state TV.

The BBC reports that Papandreou will stand down today and make way for an interim government headed by former Greek central bank head Lucas Papademou, citing sources in Athens.

Earlier this week, Papandreou proposed the referendum in a surprise move that raised fears of new uncertainty for international markets. He decided to seek support for the EU deal through a vote of confidence in the Hellenic Parliament on November 4th and a referendum from the Greek people set for December or January.

Should Greece leave the Euro and default on its debts, Cyprus banks stand to lose much more than the 50 percent haircut proposed by the EU, and could need a bailout from the government, say analysts.

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