19 May 2012

Australia confident of growth despite Europe worries

9:19 am on 19 May 2012

Australian Treasurer Wayne Swan has played down the ramifications of Europe's financial crisis for Australia, despite a further $A35 billion being wiped off the value of shares across the Tasman .

Australia's sharemarket fell sharply to close on Friday at its lowest for six months.

The S&P / ASX200 index ended the day down 110.9 points (2.67%), at 4,046.5 points, the lowest close since 5 November.

There are fears the European debt crisis may be spreading after several Spanish banks were downgraded by a ratings agency.

But Mr Swan says that his government's budget predicted Australia's economy would continue to grow, even while Europe goes into recession, the ABC reports.

In Greece, people worried how the crisis may develop are pulling money out of banks at an increasing rate.

According to the Greek Central Bank, Greeks withdrew more than $US900 million on Monday and another $US600 million on Tuesday.

Analysts say this week's outpouring of cash reflects a new level of panic, CNN reports. The withdrawals in Greece follow that country's failure to form a unity government after recent elections.

A coalition of leftists insisted the country refuse to enact budget cuts agreed to by the previous government in order to qualify for billions of dollars in debt relief from Europe and the International Monetary Fund.

Greece's caretaker cabinet was sworn in Thursday and will lead the country into a new election on 17 June.