LONDON (AP) — Renewed concerns over Greece added fresh uncertainty in markets on Monday, pushing stock indexes lower a day ahead of a nail-biting U.S. presidential election.
For the past couple of weeks, developments in the U.S. have been driving the markets. As well as monitoring the battle for the White House, investors have had to contend with Superstorm Sandy, which battered the East Coast and brought trading on Wall Street to a halt for two days.
Tuesday's election appears to be going down to the wire, though most opinion polls indicate that President Barack Obama may have the edge over Mitt Romney in the crucial swing states.
"Probably the worst case for financial markets would be an indecisive election requiring a recount that could drag on for weeks," said Sal Guatieri, an analyst at BMO Capital Markets.
In Europe, the FTSE 100 index of leading British shares fell 0.5 percent to close at 5,839.06 while Germany's DAX fell the same rate to 7,326.47. The CAC-40 in France ended 1.3 percent lower at 3,448.50, but it was Spanish shares that performed worst, with the IBEX index in Madrid down 1.9 percent at 7,818.60.
In the U.S., the Dow Jones industrial average was down 0.2 percent at 13,062 while the broader S&P 500 index fell 0.3 percent to 1,410.
Though the outcome of the U.S. election will have an impact on the global economy for years to come, it could be developments in Greece that have a larger bearing on financial markets in the last months of the year.
Two votes in Parliament this week could determine if the cash-strapped country stays in the euro.
On Wednesday, Greek lawmakers are expected to vote on a €13.5 billion ($17.3 billion) austerity package that is required by international creditors for the release of the next batch of the country's bailout funds. Without the cash, Greece faces bankruptcy.
If, and when, the package of spending cuts and tax increases is passed, lawmakers will have to approve the 2013 budget. That vote is penciled in for Sunday.
The prevailing view in the markets is that both votes will get passed but the margin of error is slim, given that a junior partner in the wobbly coalition government has said it will vote against the austerity bill if certain labor reforms are not extracted.
"Political fractiousness in the Greek coalition government raises the risk of disorderly outcomes," said Neil MacKinnon, global macro strategist at VTB Capital.
Worries over Greece have increasingly weighed on the euro over the past few days. Europe's single currency was down a further 0.4 percent Monday at $1.2781.
Earlier in Asia, Japan's Nikkei 225 index fell 0.5 percent to close at 9,007.44. Hong Kong's Hang Seng lost 0.5 percent to 22,006.40. South Korea's Kospi shed 0.6 percent to 1,908.22.
Mainland Chinese shares lost ground after four straight days of gains. The Shanghai Composite Index lost 0.1 percent to 2,114.03 and the Shenzhen Composite Index lost 0.5 percent to 858.60.
A key political event also takes place this week in China, the world's No. 2 economy. Thursday marks the opening of the Communist Party congress — the once-in-a-decade forum used to name China's top leadership.
In commodity markets, the price of crude oil fluctuated around $85 a barrel as investors remained cautious ahead of the U.S. election. The benchmark oil contract for December delivery was up 5 cents to $85.05 per barrel in electronic trading on the New York Mercantile Exchange.
- Politics & Government