Europe's markets suffer new falls on debt worries

[ItsRobsLife]

European stock markets closed sharply lower after a day of continued fears about eurozone debt problems and their potential impact on the global economic recovery.

The FTSE 100 index in London closed down by 2.54% to an eight-month low of 4,940.68 points.
Germany's Dax index was 2.34% lower, while in France the Cac 40 fell 2.9%.
In afternoon US trade, the Dow Jones was down by 1.55%, and the broader S&P 500 index was 1.51%.

Earlier, Asian markets also saw sharp falls. As well as eurozone worries, stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.

North Korea later announced it was severing ties with South Korea.

In London, the FTSE 100 has now fallen by more than 10% in little more than a month after hitting a 22-month high in April - it stands at its lowest level since 7 September 2009.

The renewed concerns about eurozone debt follow Monday's strongly-worded comments from the International Monetary Fund that the Spanish economy needs comprehensive and far-reaching reform.

That added to investors' worries over the weekend rescue of Spanish bank Cajasur by the Bank of Spain, only the second time the central bank has saved a regional lender.

Amid concerns over solvency in the sector, and in the wake of the Cajasur rescue, four Spanish savings banks then announced plans to merge.

Cajastur, Caja de Ahorros del Mediterraneo, Caja Extremadura and Caja Cantabria said they had reached agreement to form a group that would "strengthen solvency and assets of the participating banks".

"There's never been any mystery about the excessive exposure of Spain's banks to a bloated property market," said BBC business editor Robert Peston.

"The mystery has been how its banks avoided crippling losses on this exposure - although that increasingly looks like pain postponed rather than avoided.

"Or, at least, that's what today's retreat in share prices across Europe is saying, with bank shares falling especially sharply," he added.


These concerns have lead investors to seek "safe havens" for their money. German government bonds - or Bunds - are currently seen as one such place - the ten-year bund yield sank to a record low of 2.55%.

The yield is the interest rate an investor receives on a bond. If it is low in comaprison to other governments' bonds, it indicates investors have high trust that it will be paid back and are prepared to accept the lower interest in return for that certainty.

A strong dollar is another traditional safe haven.

The euro and the pound both weakened against the US currency.
The euro fell by 0.8% to $1.228. Against the pound the euro was trading at £0.855, making £1 worth 1.169 euros.

The continued weakness of the euro is a concern, with investors dumping the currency amid fears that debts will cause defaults by weaker countries in the European Union.

The single currency has fallen in value by almost a fifth against the dollar in the last six months.



Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "The toxic cocktail worsens. Continuing fears over the European debt situation stalling the global economic recovery has been exacerbated by the potential of military tensions in Korea."

And he said there was a shortage of buyers prepared to commit to the market at the present time.
On Tuesday, the European Union Economy Commissioner, Olli Rehn, warned that governments needed to make major reforms to boost growth.

"The big risk is that once the recovery gets more robust, we sit idly in self-complacency and forget the structural reforms.

"That would lead us to a sluggish recovery - or even a lost decade," he said in a speech at the Brussels Economic Forum.

He said the reforms needed for each European country varied, but he called for the opening up of national markets.

Another nation which has ignored calls to open its markets is Italy, which is set to reveal an austerity budget later on Tuesday.


Earlier in Asia, Japanese stocks fell by 3.1%, and shares in South Korea fell by 2.7%.

Australian shares fell by 3%, Taiwanese stocks dropped 3.23% and the wider MSCI measure of Asia-Pacific shares outside of Japan fell by 3.6%.
Shares in Hong Kong, Singapore, Indonesia, China, India, Thailand and Malaysia all fell.

There were reports in South Korea that North Korea had told its military to prepare for war, but only if the South attacked it first.

Tensions in the region have been growing since international investigators blamed the North for torpedoing and sinking a South Korean warship in March, killing 46 sailors.

The falls in Asia come after major markets in the US closed lower overnight, with the Dow Jones shedding 1.2% and the S&P 500 dropping 1.3%.

BBC News - Europe's markets suffer new falls on debt worries

[mr Fred]

After reading this I checked the Sterling exchange rate.
I'm glad I'm not the suicidal type.

[Butterfly]

EURO seems quite fucked, not really, but speculators seem to think that, probably coordinating attacks to dump it

first the USD, then the GBP and now the EURO. All the major. Next the JPY ? it's quite strong so it would be a good candidate for an attack.

[graym]

Australia is starting to feel it now as well. I'm working offshore here and the Aussie dollar is falling fast against sterling and the greenback; shit, so is my day rate...

[the dogcatcher]

And who are rubbing their greedy little narled hands together.
Yep, stock and forex brokers. That's where the money is going again.

[Thetyim]

Aussie dollar is falling fast

Does anyone know why ?

[Butterfly]

expected inflation ?

[planestanley]

Short selling
and profit taking its fundamentals as Chin's mine are sound just Rudd needs a few votes so the central bank darent rort rates less domestic white goods and new home starts fall.The Larikan has abetter grasp than Lark Playtham orr Johhny B Leberl on the mendacity long sightedness of Chinese moneylenders .Usuary and a cartel to fix prices which should ne blindingly obvious to any one who has resided or invested in SE Asia.
Chnese never sell land or property in slump,they sit it out hence empty lots and Hotels allover.
A witty look at the forthcoming Spanish denoument from todays Daily Telegraph uses Soccer analogy to explain the brokers scams.
Angelas voters will ditch Shoemaker(Zapatero) and Gongmeister Sarkozy of the Magyarorszag tendancy.
The fact that auditors have failed to agree the EU accounts for the 13th year tells you all you need to know.Danish Andersen was bullied out when she exposed the frauds and stuff which woud get you in jail in honest places like N Zealand or Canada.

The last decade the low life emeged from the trench and liked the fresh air Goldmans Bear Sterns and soon Euro defaults look like its a rollercoaster back to the 197os of low wages hard to get credit and mortgages and harder longer work for less benefits(unless abroker of course)


Ambrose

Where are we on the social consequences of the austerity measures currently rolling out in Europe? This goes beyond credit stress in long term consequences.

Here is a football take on how these Euro football championship matches stand as of today.

Greece: Power workers have agreed to suspend rolling 48hr strikes starting May 25th after Greek government agrees to drop commitment to Germany to cut pension benefits by 10%

Third quarter score line (Greece 1 Germany 0)

Greek score came from an early up field chase by Papandreou who put the ball into the back of the German net and walked away with the early prize money – which he is now sharing out amongst his players

Spain: Public sector and general strike 5th June on 5% pay cut starting 1st June.

First quarter score line (Spain 0 Germany 0) A disappointed Spanish crowd has started to chant abuse at their striker Zapatero who has failed to penetrate a weak German defense. The crowd are expecting another easy home win over the Germans.

Portugal: General and Public Sector strike planned for June 2nd.

After a disappointing early effort in the game against Germany, the Portuguese national team were given a harsh warning by the joint management team of CGTP unions, and FESAP-UGT of the consequences of losing this vital championship match with Germany. Portugal cannot afford to lose ground against Greece in the race for the Euro championship title. The prize money is limited and Greece has already top sliced the cream off the cake.

Half time score (Portugal 0 Germany 0)

But many consider the Greek, Portuguese and Spanish games to be the warm-up to the big teams in this Euro championship, namely France and Italy.

France: The French players are in the dressing room going through their normal head bashing, self-doubt, existentialist warm-up routine.

And it does not look good in the dug out. The players are getting conflicting messages from their manager, the mercurial Sarkozy, as to whether they should be playing for or against the German team.


However the French trainer, Bernard Thibault, head of the powerful CGT union, has no reservations. Get out there and kick the Sauer Kraut out of the Germans are his instructions.

Score line: (France 0 Germany 0 : Kick-off Thursday 27th May)

Italy: The Italians are the dark horses in the Euro Championship.

What we do know is that their management have already absolved their team from playing according to the rules. Just ignore whatever the score line says, is their mental approach. But is this really news about the Italian approach to the game?

Oddly enough the Italy / German game kicks off at the same time as the France / German game on Thursday 27th May, led by their regular captain the Italian Transport Union

Some commentators are suggesting that the German team’s schedule has become overcrowded and that they are in danger of over extending themselves.

This has been flatly denied by their manager Mrs. Merkel who insists that the Euro Championship Cup rightly belongs to the Germans and must be defended at all costs. “Stalingrad is our inspiration” she claimed.

[ataloss]

^ Stellar!!