Stability pact brings chaos to the markets

The WIG20 closed 2.1 percent down, at 2,760.65, and most of the major stocks were hit hard.

The negative prospects for the merger of BPH and Pekao took a particularly heavy toll on their stock price, as the benefits of the merger have already been priced into their stock prices. BPH dropped 4.6 percent and Pekao took a hit of 3.2 percent.

PKN Orlen was down 3.1 percent, Grupa Lotos lost 2.6 percent and KGHM closed 1.6 percent down, despite a surge in copper prices. Journalists in TVN still smoldering after being locked out of the government's signing of the stability pact could at least take heart from their stock price. It closed up by 2.4 percent after some very positive 2005 results.

Recent data suggested that the economy was speeding up, and investors had been downplaying the political risk.

However, the decision by Law and Justice to throw its lot in with parties from opposite sides of the political spectrum who have made plain their hostility towards market reforms finally forced the markets to react. (Reuters)