An outcry of outrage went through markets at the announcement of the [GREEK REFERENDUM], as PM Papandreou is accused of jeopardizing combined EU efforts to calm nerves. Although it is certainly true that markets are not taking kindly to the Greek plans, there are some that point out an uncomfortable fact: The PM hardly has a choice. Without solid political backing, doubts over the feasibility of further fiscal steps will linger and although Papandreou's strategy is highly risky it could turn into the biggest break-through in the crisis, if successful, and would send a strong signal. Commentary in the FTD goes even further, pointing out that a positive vote may boost other countries' courage to take decisive fiscal steps and bring the EMU/EU back on to the right track. However, Papandreou is walking a fine line between massive benefits and equally substantial costs, putting plenty of pressure on already strained nerves. 07:52 GMT - [EU STOCKS] are in for a caning at the open. Futures indicate core bourses (allied with Bunds +170 ticks) to plummet, FTSE -2.1%, Dax -3.3%CAC -2.4%, Euro Stoxx 50 -2.8%. The list of reasons reads like a who's who of risk off sinners. Top is, Athens decision to hold a referendum on its latest austerity measures from which a 'no' raises the potential for Greece to ultimately leave the EZ. Wall St's reaction was predictable, Dow -2.3%, S&P -2.4%, Nasdaq -1.9%. On top of that there is the MF Global fiasco & the unexpected fall in China Oct PMI has reignited concerns over global growth. Hence most of Asia-Pac also dumped, Nikkei -1.7%, HK -2.3%, ASX -1.5%, but Shanghai is at par. Stock volatility measures are also on the rise again, VStoxx/VDax already 30+ & the Vix is a shade under 30 & Credit Suisse also missed earnings estimates. All Saint's Day across Europe, but investors will be looking for an Angel of Mercy.
