DEBT FINANCING. French banks of Hammer of standard Greek nervousness, euro

PARIS (Reuters)-the growing fears of a Greek default sent a hurricane through heavily exposed French banks on Monday and hit the euro as investors ' confidence in the ability of the European monetary area to overcome a sovereign debt crisis ebbed.
Shares in Societe Generale, BNP Paribas and Credit Agricole fell by more than 10% amid expectations of an imminent downgrade by Moody's credit ratings Agency, mainly due to its exposure to Greek bonds.
The shock resignation of the Chief Economist of the European Central Bank Juergen Stark Friday and weekend comments by German politicians suggesting that Athens may have to default and be "suspended" in the euro zone, led the euro to a low-10 years against the yen and a 7-month low against the dollar.
"Europe is not just walking with one crisis to another. He is heading for a new before previous is resolved, "said Makoto Noji, senior strategist at SMBC Nikko Securities.
The storm forced SocGen French, the lender more success in recent weeks, announcing measures more drastic denied last week were under consideration, accelerating the disposal of assets and deepening cuts costs.
SocGen shares are now trading at a historic low of 15.55 euros, after losing more than two thirds in seven months. Since mid-2007 that the Bank saw 52 billion euros (US $ $71,3 billion) swept in their market value, which is today of 13.5 billion--less than spirits group Pernod Ricard or fashion house Christian Dior.
The Bank's Chief Executive, Frederic Oudea, said there was no ongoing discussions regarding possible state intervention French banks and the Bank of France Governor Christian Noyer ran out a statement saying that French banks were not at risk.
"No matter what the Greek scenario, and all measures that should be passed, French banks have the means to confront it," Noyer said.
French banks and insurers are not only the largest foreign holders of Greek Government bonds, both directly and through subsidiaries, but also the Greek top creditors of Italy, which is increasingly under fire from the market.
Moodys is also expected to downgrade the sovereign rating of Aa2 from Italy this week, Richard Kelly, head of European research rates and FX TD Securities, said, noting that both Fitch and Standard & Poors already had low ratings for Rome.
START A CLAIM
It was an ominous start to a week of high risk for the eurozone.
The Greece is due to resume suspended negotiations with international lenders on Wednesday in a plot of vital aid of 8 billion euros after announcing a new estate tax on Sunday to try to more a gap in his 2011 budget deficit.
EU Finance Ministers are struggling to resolve disputes over a bailout second planned for Athens, including a fight about Finnish requirements for security, time for a meeting in Poland on Friday.
This rescue package proposed was cast in doubt by Greece of repeated lack of budgetary targets agreed with the EU and the International Monetary Fund, as well as by persistent doubts about the extent of private sector participation in a swap overlay and bond debt.
The German Government tried to wipe down the market impact of a string of weekend comments and media leaks, suggesting that Berlin is now assuming that Greece will default and working to delimit Athens from the rest of the eurozone.
Vice Chancellor Philipp Roesler, who is the Minister of economy and increasingly leader Eurosceptical Junior coalition party Berlin, free Democrats (FDP), said that there could be any taboos to stabilize the euro.
"That includes, if necessary, an orderly bankruptcy of Greece, if the necessary tools are available," he was quoted as telling the newspaper Die Welt.
However, a spokesman for the Economics Ministry said on Monday, none of these instruments currently available, and a Government spokesman insisted that there was strong agreement between Roesler and Chancellor Angela Merkel in euro zone debt crisis.
"We want to stabilise the whole euro zone with all Member States," Government spokesman Steffen Seibert said a summary of news.
Asked about talk of a suspension or expulsion or voluntary departure of Greece in the euro zone, he said: "the legal position ultimately represents the these steps".
The European Commission also said that he was working on a scenario of a Greek default.
But Seibert of Germany added that if Athens failed to fulfil its commitments to tax the EU, the ECB and the IMF, which would automatically lead to non-payment of the next installment of the aid.
Vice Minister of Finance of Greece said on Monday that the Government had money to operate until next month, highlighting the urgent need of emergency loan next stay afloat.
"We have definitely maneuvering space within October" television channel, said Filippos Sachinidis Mega when asked how much longer the State would be able to pay wages and pensions.
Media commentators and analysts said that exit by high-ranking German on ECB in protest against the policy of buying securities of euro area countries weak still had sapped confidence in the single currency.
Morgan Stanley analysts "would suggest that reputation problems created by the loss of Stark, Weber's departure especially coming so soon after (former President of the German federal Bank Axel), will be useless to the euro," said in a note.
The European Commission gave a more optimistic forecast for economic growth next year than many private forecasters, rebuffing the fears of a recession induced by the US and European debt crisis.
The EU Executive said that the Bloc's economy was likely to grow by 1.9 per cent in 2012, more or less the same as this year.
"Member States facing pressures from the market must continue to deliver to achieve its fiscal targets and take additional measures if necessary", economic and Monetary Affairs Commissioner Olli Rehn said.
But in an apparent shift to Germany, said that those countries that have room for fiscal manoeuvre should use spending to support growth and employment, while sticking to their adjustment path.

Posted in: DEBT FINANCING. banks,French,Greek,Hammer,nervousness,standard