European stocks ended mixed and the euro slid yesterday after the EU delayed a decision on releasing critical rescue funds to Greece despite a US warning that dithering puts the global financial system at risk.
London’s FTSE-100 index of leading shares rose 0.58 per cent to 5,368.41 points, while Frankfurt’s DAX climbed 1.18 per cent to 5,573.51 points.
Paris’s CAC-40 slid 0.48 per cent to 3,031.08 points.
The euro dropped to $1.3784 from $1.3882 late in New York on Thursday, when it soared above $1.39 following surprise central bank action to ease dollar liquidity problems on the market increasingly concerned about an aggravation of the eurozone debt crisis.
The dollar rose to 76.89 yen from 76.66 yen on Thursday.
While markets had been looking for signs that European leaders were making progress on how to deal with Greece and the risks a default poses to the eurozone financial system, most equities rose nevertheless on the central bank action.
“Caution still remains about the fluidity of the situation in Europe,” said CMC Markets analyst Michael Hewson, adding that the slide in French equities was on news the Greek debt rollover may not receive sufficient support to go forward.
French banks have mostly taken provisions for Greek debt for the loss they would incur in the rollover, part of a planned bailout for the country worth around €160 billion overall.
If the rollover plan failed the banks would be forced to provision for greater losses.
A meeting of eurozone finance ministers in Wroclaw, Poland, decided yesterday to delay until October a decision on eight billion euros of bailout loans blocked until Greece has convinced auditors it is on track to cut its deficit.
“We will decide on the disbursement of the next tranche of the Greek adjustment programme in October,” said Luxembourg Prime Minister Jean-Claude Juncker, who also heads up the Eurogroup of eurozone finance ministers.
In a sign of the rising concern about the eurozone debt crisis, the Wroclaw talks were exceptionally attended by US Treasury Secretary Timothy Geithner.
He heaped pressure on the eurozone to end potentially “catastrophic” in-fighting that delayed Greek aid and approval of new tools to fight the effects of the debt crisis on the banking system.
“What’s very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the [European] Central Bank,” Mr Geithner said on the sidelines of the talks in Wroclaw, southwest Poland.
“Governments and central banks need to take out the catastrophic risk to markets,” he added.
Mr Geithner urged Europe to increase the size of its €440 billion ($607 billion) European Financial Stability Facility for troubled member states and take more action to shore up the financial and banking sector. (AFP)
The ECB has also called on eurozone states to use a beefed-up EFSF to relieve it of its reluctant interventions in secondary bond markets to ease lending rates to under-pressure eurozone states.
Wall Street opened higher, following Europe’s lead and on positive consumer confidence data.
Approaching midday, the Dow Jones Industrial Average was up 0.26 per cent at 11,463.15 points. The broader S&P 500 rose 0.32 per cent to 1,213.01 points, while the tech-heavy Nasdaq Composite gained 0.28 per cent to stand at 2,614.48 points.
Asia-Pacific stock markets rallied yesterday following the coordinated central bank action which came after the region’s close of play on Thursday.
Tokyo jumped 2.25 per cent, Hong Kong climbed 1.43 per cent, Seoul soared 3.72 per cent and Sydney rallied 1.91 per cent.
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