Sharechat Logo

While you were sleeping More signs of EU weakness

Tuesday 19th February 2013

Text too small?

Equities in Europe fell as European Central Bank President Mario Draghi warned of "further weakness" in the region's economy.

Data released last week showed that the EU economy contracted more than expected in the fourth quarter, shrinking 0.6 percent from the previous three months.

"Available indicators signal further weakness at the beginning of 2013, with domestic demand remaining dampened," Draghi told EU lawmakers in Brussels today.

Europe's Stoxx 600 Index declined 0.2 percent. The UK's FTSE 100 also fell, closing down 0.2 percent. France's CAC 40 gained 0.2 percent, while Germany's DAX strengthened 0.5 percent.

Wall Street was closed for the President's Day holiday on Monday.

Draghi also sought to play down any talk of currency wars as central banks provide cheap money to help revive their economies. The euro fell 0.2 percent against the US dollar.

New Zealand Story

"Most of the exchange rate movements that we have seen were not explicitly targeted, they were the result of domestic macro-economic policies meant to boost the economy," Draghi said. "In this sense, I find really excessive any language referring to currency wars."

The Japanese yen slid fell 0.5 percent against the US dollar, and weakened 0.4 percent against the euro, after Group of 20 finance ministers and central bank governors refrained from asking countries to avoid targeting exchange rates.

"There's renewed selling pressure on the yen and it's a reaction to the G-20 statement," Adam Myers, head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London, told Bloomberg. "Everyone has woken up to the realisation that the G-20 couldn't criticise Japan when many other countries are manipulating their own currency."

One development that could help the yen is the naming of a new governor for the Bank of Japan. Reuters says that Prime Minister Shinzo Abe may nominate former financial bureaucrat Toshiro Muto as early as this week. Masaaki Shirakawa will give up the post on March 19.

Commodities including nickel, copper and aluminum weakened amid concern about the pace of growth in China, following a report showing disappointing retail sales.

Nickel for delivery in three months was last down 2.7 percent to US$17,890 a metric ton on the London Metal Exchange, after earlier sliding as much as 3.1 percent, the most since October 12, and dropping below the 34-day moving average at about US$17,837, according to Bloomberg.

 

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar falls against Aussie; RBNZ seen as more dovish than RBA
Air NZ CFO named acting chief executive
Waitomo favours more open wholesale fuel contracts
Stable ETS important for Marsden Point
Fletcher directors enjoy pay rise as earnings fall
Steep rate cut aimed at staving off unconventional monetary policy: Hawkesby
Mark Waller to step down as Ebos chair
Nimbys, carparks and the status quo under threat as govt tells big cities: grow up and out
FIRST CUT: Fletcher's annual operating earnings meet guidance
A2 Milk shares fall 15% despite solid result

IRG See IRG research reports