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Greek stocks dip at open, sentiment cautious

ATHENS: Greek stocks moved lower in thin volume at Thursday's open with investors still cautious after Wednesday's negative market response to a sharp interest rate cut by the central bank. The general share index .ATG was losing 0.47 percent or 23.16 points to 4,913.53 from Wednesday's 4,936.69 close, 24 minutes into the session.

"Prices are still swinging widely and any rise in the index is used to limit the exposure." he said. "Investors are still taking a very short-term view of the market."

Institutional investors were maintaining high liquidity levels because of uncertainty about the market's near-term direction.

"We are realising capital inflows on a daily basis but cannot take the risk to commit these funds in the market at this point," said a fund manager.

Egnatia Securities said in a report that some further downside may come about given the reluctance of retail investors to buy stock and the selling pressure from foreign funds. But it noted that fundamentals did not justify lower prices.

The Bank of Greece shaved between 50 and 100 basis points off its key interest rates on Wednesday, citing favourable forecasts for inflation, the recent revaluation of the drachma's ERM-2 central parity and contained money supply growth.

National Bank and the Piraeus Bank Group , which includes Xiosbank XIOr.AT and Macedonia-Thrace Bank , were the first commercial banks to reduce their savings and lending rates.

Finance Minister Yannos Papandoniou said Wednesday's stock market drop came about because investors had largely discounted the interest rate cuts and the country's eurozone entry in 2001.

But he noted that prospects are brighter because the country is headed for an upgrade to developed status, significant monetary easing and a formal approval of its EMU participation.

The European Union said the Commission will take into account the latest inflation data in assessing Greece's EMU entry application, with March data expected to be included.

Laggards were beating gainers 161 to 127 with 24 stocks unchanged on 312 traded.

Turnover was 14.6 billion drachmas on volume of 2.2 million shares.-Reuters