Europe’s main stock markets rose yesterday and gold soared to another record high, while the euro fell back against the dollar as investors fretted over weak recovery in certain eurozone nations.
London’s benchmark FTSE 100 index of leading shares won 0.43 per cent to close at 5,875.19 points, Frankfurt’s DAX 30 rose 0.55 per cent to 6,787.81 points and the Paris CAC 40 climbed 0.82 per cent to 3,945.71 points.
The European single currency, which has been hampered this week by resurgent concerns over eurozone sovereign debt, fell as low as $1.3824 before clawing back to $1.3871 in late London trade.
The dollar fell to 81.03 yen from 81.18 yen. Gold soared to a fresh record of $1,424.35 per ounce on the London Bullion Market, a day after having broken through the 1,400 barrier, as the dollar fell.
“European equities have swung back into positive territory as the US dollar gave up its early gains,” said analyst David Morrison at trading website GFT.
Elsewhere in Europe share prices rose 0.30 per cent in Amsterdam, 1.15 per cent in Madrid, 1.65 per cent in Milan.
“We are in a transitional area now with all the major US news out of the way and a renewed focus on eurozone sovereign debt,” he told AFP. The yield – the return for investors – on Irish bonds rose to 7.744 per cent yesterday from 7.646 per cent.
“The euro/US dollar will now dominate trading, but in the absence of concrete news out of the European peripherals like Ireland and Greece, the single currency is likely to swing between technical support and resistance levels. This will lead equities.”
Gold has surged to fresh pinnacles this week, boosted by its safe-haven status and the weaker US currency, which makes dollar-priced commodities cheaper for buyers with stronger currencies.
“Gold and silver continue to soar and this is a real warning to investors that all is not well with the global financial system,” added Mr Morrison.
“Precious metals are a safe haven and ultimate store of value. The outbreak of a full-blown currency war will only increase their appeal.”Rabobank analyst Jane Foley also noted that “China is hinting that perhaps its policy is too expansionary which is supportive for gold.”
On Wall Street trading was mixed as investors were taking a breather for a second consecutive day after last week’s rally driven by a massive Federal Reserve stimulus move.
The Dow Jones Industrial Average was down 0.10 per cent to 11,395.71 at midday. The S&P 500 index, a broader measure of the market, slipped 0.02 per cent to 1,222.65 while the tech-rich Nasdaq composite index edged up 0.10 per cent to 2,580.63.
“The major equity averages remain mired near the neutral line. This makes for the second straight session of sideways chop following the two-year high that the stock market set last week,” Briefing.com analysts said in a client note.
Later this week, investors will pay close attention to Group of 20 summit talks in South Korea, dealers said, amid simmering tensions between China and the United States over economic and monetary policy.
Super-loose US monetary policy has been cited as a factor roiling currency markets, hammering the dollar and prompting a wave of speculative money to pour into Asia and drive up regional currencies.
That has sparked concerns over a damaging “currency war” in which nations compete to weaken their currencies to protect exports.
Dealers in Asia took their cash off the table to pocket profits from recent strong gains following the recent US stimulus move.
Tokyo fell 0.39 per cent to 9,694.49 and Sydney fell 0.79 per cent to end at 4,740.7. Hong Kong fell 1.02 per cent to 24,710.60 and Shanghai was off 0.78 per cent to close at 3,135.00.