Greek Vote No Doomsday For The Euro

Morning Business Memo:

The doomsday event has been avoided for the euro, at least for now. Things could have been a lot uglier today on financial markets. Voters in Greece ended months of political stalemate by narrowly backing pro-bailout parties in the election. The result makes it less likely that Greece will soon make a disorderly exit out of the single currency euro zone. Antonis Samaras, the leader of the New Democracy party has begun talks this morning on forming a new coalition government. The vote was a defeat for Syriza, the socialist party that threatened to nationalize banks and reject austerity policies required by the European and IMF rescue. Greek bank stocks made strong gains this morning, and most European stock averages rose.

But Europe's problems are very far from being solved. Over the longer term the weekend election in France may be seen as more important than the Greek result. French socialists won an outright Parliamentary majority, strengthening the recently elected President Francois Hollande. The Franco-German rift over tighter central European control of government may widen.

The big worry this morning is Spain. Yields on 10-year Spanish bonds moved above 7 percent this morning. Spain is a focus of fears it might be the next euro zone country to need a full bailout. The government is to announce this week how much of a $125 billion fund it will tap to rescue banks that got burned when Spain's real estate bubble popped.

Watch out Apple, here comes Microsoft. The most serious challenge to the iPad could be coming today. Microsoft is widely expected to unveil its own tablet computer, which might include a smaller screen than the iPad - in response to growing consumer demand. Microsoft declined to comment. Media reports are citing unnamed sources saying that Microsoft will launch its own tablet to boost its new Windows 8 operating system.

Likely market movers this week include Wednesday's statement by the Federal Reserve on the US economy. It will come after a scheduled set of meetings. For now the U.S. economy is expected to grow at an annual rate of about 2 percent for the rest of the year. Several reports may indicate if there has been any improvement in the depressed housing market. Surveys are set to be released on builder sentiment, housing starts and existing home sales.

Richard Davies Business Correspondent ABC News Radio twitter: daviesabc

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