 |
Government debt concerns weigh on European markets
In Europe, the FTSE 100 index of leading British shares was down 40.63 points, or 0.8 percent, at 5,212.52 while Germany’s DAX fell 29.15 points, or 0.5 percent, at 5,642.94. The CAC-40 in France was 25.88 points, or 0.7 percent, lower at 3,767.59.
Wall Street was poised for further declines later following Wednesday’s drop in the wake of a weaker than expected survey into the US services sector -- Dow futures fell 51 points, or 0.5 percent, at 10,190 while the broader Standard & Poor’s 500 futures fell 6.3 points, or 0.6 percent, to 1,090.10.
“The overall tone is set to remain cautious, with various concerns still weighing on confidence,” said Stuart Bennett, an analyst at Calyon Credit Agricole. “Sovereign ratings-fiscal concerns remain high amongst these.”
Investors in Europe, in particular, will be focusing later on the monthly press conference of European Central Bank President Jean-Claude Trichet.
The bank is set to keep its interest rate unchanged for the ninth month running at 1 percent. Trichet will likely face questions instead on the crisis surrounding Greece’s huge budget deficit and mounting concerns that market contagion will spread to other countries with large deficits such as Spain and Portugal.
Once again, stock markets in Greece, Portugal and Spain underperformed their counterparts in Europe -- Greece’s main composite index was down 1.4 percent at 1,980.30, while Spain IBEX fell 2.3 percent to 10,639.10 and Portugal’s PSI 20 dropped 3.9 percent to 7,530.
All this uncertainty is having a major impact on the euro, which fell earlier to $1.3827, its lowest level since June 23, before recovering modestly to $1.3843.
Analysts think that Trichet will continue to distance the ECB from any idea of helping Greece and will instead leave it in the in-tray of the European Union member governments -- particularly Germany and France.
On Wednesday, the European Commission gave its cautious backing to the Greek government’s plan to slash the budget deficit from around 13 percent in 2009 to below 3 percent in 2012.
Despite the Commission’s cautious backing, the markets remain unconvinced that Greece can pull it off and are increasingly coming round to the view that Portugal and Spain, in particular, will face mounting difficulties dealing with their own budgetary difficulties. On Wednesday, Portugal cut a planned treasury bill issue and Spain said its deficits will be more than anticipated over the coming three years. “It would appear the sovereign debt problem is turning into a contagion in the eurozone,” said Michael Hewson, an analyst at CMC Markets.
The other major point of interest in Europe Thursday will be whether the Bank of England will request more the authority from the British government to pump in more money into the barely-recovering British economy.
|
||||||||||||||||||||||||||||||||||||||||||||||||||
| AMANDA PAUL |  |
||
| Ukraine: a lost country | |||
| MÜMTAZER TÜRKÖNE |  |
||
| The 52nd anniversary of May 27 | |||
| ABDULLAH BOZKURT |  |
||
| Turkey and Mexico: Distant yet so close | |||
| BERİL DEDEOĞLU |  |
||
| Yemen and beyond | |||
| ARZU KAYA URANLI |  |
||
| On Memorial Day a few words to make your day memorable | |||
| ABDÜLHAMİT BİLİCİ |  |
||
| Google kidnaps Gül! | |||
| CUMALİ ÖNAL |  |
||
| Critical months for Egypt | |||
| DOĞU ERGİL |  |
||
| Qualities of power | |||
| İHSAN YILMAZ |  |
||
| The Egyptian elections, Islam and Islamists | |||
| EMRE USLU |  |
||
| Operational errors | |||
| MARKAR ESAYAN |  |
||
| There is need for a new initiative | |||
| JOOST LAGENDIJK |  |
||
| Europe can’t have it all. Or can it? | |||
| HASAN KANBOLAT |  |
||
| Are Russian tourists being discouraged from visiting Turkey? | |||
| MELİH ARAT |  |
||
| Handmade | |||
| KLAUS JURGENS |  |
||
| Back to the ’80s | |||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||
