TM:European stocks and euro slide as Germany worries the markets
European stocks retreated and the euro hit a two-month low point versus the dollar yesterday on fresh eurozone concerns as Germany reported falling investor confidence and Vodafone announced sharp losses.
Yesterday’s developments overshadowed better news for Greece, which managed to raise funds to avert a messy default this week.
In stock market trade, the benchmark FTSE 100 index of top companies dropped 0.51 per cent to 5,738.11 points in afternoon trading as investors also reacted to a surge in British inflation.
Frankfurt’s DAX 30 slid 0.75 per cent to 7,111.79 points and in Paris the CAC 40 shed 0.32 per cent to 3,400.65. Madrid lost 0.60 per cent and Milan gave up 0.79 per cent.
“Things really aren’t improving much in the eurozone and it’s starting to spook investors again,” said Angus Campbell, head of market analysis at Capital Spreads trading group.
In foreign exchange deals, the euro slipped to $1.2662 – the lowest level since September 7. It later recovered to $1.2681, still down from $1.2709 late in New York on Monday.
China’s yuan currency hit a record high against the US dollar as a recovery in the domestic economy and US political pressure helped the unit strengthen, analysts said.
The yuan touched an intra-day high of 6.2262 to the dollar, according to the China Foreign Exchange Trade System, marking the strongest level since China launched its modern foreign exchange market in 1994.
It also registered a record closing high of 6.2265, firming from Monday’s close of 6.2291.
Trade data released on Saturday lifted confidence in the domestic economy, according to analysts, while an expected US Government report on exchange rates may be prompting the central bank to guide the yuan higher.
“China’s economic recovery, albeit weak, may attract foreign capital to put investment in yuan-denominated assets, driving demand for the currency,” a Beijing-based foreign exchange analyst, who declined to be named, told AFP.
Gold prices fell to $1,724.75 an ounce from Monday’s $1,735.25 on the London Bullion Market.
Fears that the eurozone debt crisis could propel Germany into recession grew on Tuesday after investor sentiment in the bloc’s biggest economy dropped unexpectedly.
The widely watched index of investor confidence compiled by the ZEW economic institute fell to minus 15.7 points in November from minus 11.5 in October.
Analysts polled by Dow Jones Newswires had expected a gain to minus 10 points.
Elsewhere, Greece yesterday raised €4.062.5 billion in short-term bond auctions. The fresh funds plug a financing gap left by a stalled EU-IMF loan which risks triggering default on a short-term debt settlement on Friday.
Eurozone finance ministers were to meet on November 20 to discuss whether Athens would at last be given the urgently needed funds.
