Eurozone worries hit stock markets
Tuesday 15 November 2011
Investors were shaken by more political uncertainty in the eurozone today, triggering further volatility on the stock markets.
The FTSE 100 Index was flat after Italian borrowing costs remained at unsustainable levels as premier-designate Mario Monti fought to assemble a new government to steer Italy through its debt crisis.
The debt-laden country saw 10-year bond yields hover above the critical 7% mark, in a sign investor confidence in Italy's finances remains low, while Spain's borrowing costs were not far behind ahead of Sunday's election.
Meanwhile, underlying problems facing the 17-nation bloc were highlighted by sluggish growth figures which revealed that gross domestic product grew by 0.2% in the eurozone between July and September.
Louise Cooper, markets analyst at BGC Partners, said: "Terror is stalking the markets and taking hold. Political leaders beware, this crisis is worsening, and worsening dramatically."
While Mr Monti fought to piece together a new government in Italy, Spain saw borrowing costs soar amid uncertainty ahead of this weekend's general election, which should see opposition conservatives come into power.
The rises on bond markets convinced investors to shy away from risky assets and stocks, which have direct or indirect exposures to sovereign debt, including banks and insurance firms.
Royal Bank of Scotland and Barclays fell 3% and 1% respectively while Lloyds Banking Group was down 3%, and Aviva off 1.4%
Meanwhile, economists warned that the eurozone was on the cusp of recession after the dismal third-quarter figures.
Chris Williamson, chief economist at financial information services firm Markit, said the downturn would not be limited to "periphery" countries.
He said: "The combination of weaker global demand, austerity measures and uncertainty caused by the sovereign debt crisis is also likely to cause downturns in both Germany and France, although Italy looks set to be the first of the four largest euro nations to slide back into recession."
The weak sentiment hit oil prices, with Brent crude in London dropping 0.5% to 111.66 US dollars (£70.61) a barrel and sweet crude on the New York Mercantile Exchange falling 0.6% to 97.60 US dollars (£61.73).
The US dollar, seen as a safe haven investment in times of turmoil, was up against most major currencies, including the pound at 1.58.
There was some cheer on the other side of the Atlantic as retail sales grew for the fifth month in a row in the US, offering some positive distraction from the fragile situation in Europe.
interviewThe producer and activist, Trudie Styler, whose film 'Filth' is up for five film awards, is tapping into the industry's neglected female talent
musicBlack Sabbath have pulled off one of rock music’s great comebacks – against all odds
interviewHer estate has become the nation's glossiest food empire
theatreTheatre's hitmaker Daniel Evans on 'Oliver' and bringing 'The Full Monty' to the stage
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
tvParents (and kids) rejoice! A new wave of fantastic family entertainment is here
booksGeese, gorillas, grandads... and growing up
food + drinkHow one grocery e-tailer is gearing up for the Yuletide rush
food + drink
travelFor broadcaster Mishal Husain, a long-haul Club Med holiday was a chance for her family to explore its sense of 'zen' and 'animation'
food + drinkFestive snacks don't have to be fiddly, says Bill Granger
Hundreds arrested as Canadian police smash worldwide paedophile ring
Nelson Mandela: 11 inspirational quotes to live your life by
Ja Rule forced to deny leaving wife for prison cell mate
The 'terrorist' and the Tories: What did Nelson Mandela really think of Margaret Thatcher?
Crash pilot who threatened Ukip leader Nigel Farage found dead
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 2 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 3 People will try to reduce Mandela to a lilting reggae tune about ‘love’. They will fail
- 4 Why Barcelona chose Everton to educate their latest prodigy
- 5 Back from the dead? Family Guy's Brian Griffin 'to make a comeback' after fan petition
- < Previous
- Next >
iJobs Money & Business
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£30000 - £40000 per annum + Bonus and Benefits: Harrington Starr: A global Con...
£150 - £250 per day: Cornwallis Elt : iPhone Rollout- Blackberry Enginee...