Sharechat Logo

While you were sleeping Italian deadlock, Cyprus worry

Thursday 28th March 2013

Text too small?

Stocks on both sides of the Atlantic slid amid concern about Europe's debt crisis spurred today by the apparent inability of Italian political leaders to agree on the formation of a new government.

Meanwhile, Cyprus is preparing for a reopening of its banks tomorrow for the first time since the nation reached an accord with the EU for a financial bailout that is partly funded by bondholders and depositors; the country's leaders are discussing limits on the flow of capital.

Cypriot banks will open for six hours tomorrow, starting at noon local time.

A Greek newspaper reported that Cyprus will restrict the flow of cash from the island and may limit the use of Cypriot credit cards abroad. The details came from what officials told Reuters was as yet only a draft government decree.

The euro shed 0.7 percent against the greenback and fell 0.8 percent against the yen.

In Europe, the Stoxx 600 Index ended the session with a 0.5 percent slide from the previous close. Benchmark stock indexes also fell in Frankfurt, London and Paris, closing with declines of 1.2 percent, 0.2 percent and 1 percent respectively.

"A bit of pessimism out of Italy is certainly part of the story and obviously the Cypriot reverberations continue," Eric Lascelles, chief economist in Toronto for RBC Global Asset Management, told Bloomberg News.

"There is a general level of wariness. It's not that there's a likely disaster in the next few days. It's more along the lines that Europe is materially riskier than previously imagined and so exposure to European investment is riskier than first thought," Lascelles said.

Yields on Italy's benchmark 10-year bonds jumped 21 basis points to 4.78 percent. Demand was tepid for the 6.91 billion euros of debt the country auctioned today. Centre-left leader Pier Luigi Bersani is set to report back to Italian President Giorgio Napolitano tomorrow on his talks with other political parties.

Bond yields in Spain also rose after the government boosted its estimate for its 2012 budget shortfall, a day after that nation's central bank forecast an even deeper contraction this year.

The latest economic data out of Europe did not help the mood either. Confidence in the euro zone's economy shrank more than expected in March. An index of executive and consumer sentiment slid to 90 from 91.1 in February, according to the European Commission.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.35 percent, while the Standard & Poor's 500 Index dropped 0.28 percent, and the Nasdaq Composite Index slid 0.23 percent.

In the US, an index of pending home sales dropped 0.4 percent to 104.8 in February, after a revised 3.8 percent gain in January, according to the National Association of Realtors. Inventory is the key bottleneck.

"Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels," NAR chief economist Lawrence Yun said in a statement.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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:

The customer is always right
The modern era of globalisation is in danger
SeaDragon delisting announcement
Kiwi Property reports 2020 financial results
Plexure powers ahead with record revenue growth and profit
Metlifecare substantial shareholders support court action to enforce sia
Fonterra provides performance and milk price updates
Millions of Newly Jobless in China Pose a Looming Threat to Xi
Strong seasons set up venison industry to weather Covid-19 storm - industry analyst
Soaring Silver Attracts Investors

IRG See IRG research reports