Disappointed stock markets in Europe fell sharply yesterday after European Central Bank chief Mario Draghi announced no immediate monetary measures to ease debt pressures in the eurozone.

While Mr Draghi said the euro was “irreversible”, Europe’s main exchanges all headed deep into negative territory, with traders disappointed that strong words from the central banker last week were not backed up by new policy steps.

“The European Central Bank talked tough but offered no immediate measures to try to solve the eurozone sovereign debt and economic crisis,” Charles Schwab & Co. analysts said.

Analysts said the reverse was sharp and swift, with long-term borrowing costs for struggling Spain spiking back above the seven per cent danger level as the markets zeroed in on apparent ECB differences over buying up eurozone government bonds.

Mr Draghi said the ECB was considering such intervention, but the details had still to be worked out in coming weeks with member state governments – a comment which many took to mean that eurozone paymaster Germany remained opposed to intervention.

London’s benchmark FTSE 100 index of top companies held up better than most, losing only 0.88 per cent to 5,662.30 points, but in Frankfurt the DAX 30 slumped 2.20 per cent to 6,606.09 points, while the Paris CAC 40 lost 2.68 per cent to 3,232.46 points.

Madrid was the worst affected, dropping 5.16 per cent after it had been especially hoped there would be some ECB measure to help Spain cut its borrowing costs, while Milan tumbled 4.64 per cent

In New York stocks were also under pressure, with the Dow Jones Industrial Average down 1.36 per cent at around 1600 GMT and the tech-rich Nasdaq shedding 0.65 per cent.

Trade was relatively quiet after a modest increase in new US unemployment benefit claims, but the market was waiting for today’s July jobs report after three straight months of weak growth.

Analysts expect the US economy to have added 100,000 jobs in July, only 20,000 more than in June, to leave the unemployment rate stuck at 8.2 per cent.

On the foreign exchange markets, the euro briefly topped $1.24, which was the highest level since June 5, but it quickly pulled back to $1.2215 as traders fretted over the lack of concrete ECB measures, compared with $1.2223 in New York late Wednesday.

By the European market close, the euro was lower still at $1.2150 and analysts said it was likely to weaken further.

“As markets digest the fact that the ECB has done nothing concrete to sort out Spain’s problems, $1.20 comes back into view,” said research director Kathleen Brooks at trading site Forex.com.

Financial markets had expected the ECB to deliver measures to ease eurozone debt crisis tensions after Mr Draghi had vowed last week “to do whatever it takes to preserve the euro”.

He reiterated yesterday the ECB was ready to do this – but eventually, not just yet.

In face of growing pressures, Mr Draghi said the ECB “may undertake outright open market operations”, but added that the details would be worked out in the coming weeks.

Mr Draghi was speaking after the ECB left its key benchmark interest rate unchanged at 0.75 per cent, a move which had been largely expected.

The disappointment spread to the secondary bond markets where 10-year rates for Spanish debt rose sharply to 7.165 per cent from 6.73 percent on Wednesday and Italian debt rose to 6.327 per cent from 5.93 per cent.

Before the ECB meeting, Spain raised a total €3.132 billion with the average yield on benchmark 10-year bonds at 6.647 per cent compared to 6.430 per cent in the last comparable auction on July 5.

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