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European shares and periphery euro zone bonds plummeted on Monday once the Greek parliament rejected government’s presidential candidate. Prime Minister for Greece, Antonis Samaras failed to get the required support for Stavros Dimas, his nominee. He called for a national election for January 25th.

This gave rise to the possibility of Syriza government in Greece. The reaction of the markets is a reflection of the uncertainity that comes with Syriza party which plans to wipe out a big-part of the Greece’s debt and cancel the bail-out terms of the European Union and International Monetary Fund.

Stocks in Athens fell as much as 11 percent, a two-year low and yields on government 10-year bonds rose sharply to 9.7%. Investors made a dash into ultra-safe German equivalents to a record low of 0.564%.

Holger Schmieding at Berenberg Bank in London, said that while a Greek accident has become a strong risk the risk is mostly for Greece itself.

As many in the market are still on the Christmas break, when trading resumes, futures markets pointed to a 0.1% – 0.2% dip from the record highs for Wall Street. Meanwhile in Russia, the rouble’s rebound saw a reverse as it dropped as much as 6%.

Significance Downplayed

Analysts at JPMorgan Chase and co. said that owing partly to the ECB’s likely start of sovereign bond purchases, Countries along Europe’s edges are better equipped now. Especially spain and Italy have turned the corner economically.

The analysts, in a note to the clients said that the distress in Greek Financial markets had negative impact on other markets but they are inclined to downplay the medium term significance of the Greek political crisis.

Talks to save the Euro

According to an Italian newspaper, La Stampa, the German chancellor Angela Markel, has been preparing for a new, centre-left government in Athens. It said that Jorg Asmussen, a German Cabinet minister has been in secret talks with senior members of Syriza.

Asmussen is labelled as a favourite of Mario Draghi, president of ECB, and the German Finance minister, Wolfgang Shauble. Previously, Asmussen served on the executive board of ECB and was chosen by Frankfurt and Berlin to deal with Alexis Tsipras, leader of Syriza who’s advocating a total wipeout of the Greek Foreign debt.

Earlier this month, shauble said that any new government should compel with the duties taken by its predecessor, implying that Syriza winning the elections in January will not deviate the government from acting in accordance with the bailout agreement with the ECB and IMF.