Market fears over Italy

 

The prospect of new governments in Greece and Italy helped support market sentiment, at the end of a hugely-volatile week when investors fretted over the future of the euro currency and the outlook for the global economy. 

With Greece having appointed Lucas Papademos as the prime minister of a coalition government, and Italy expected to appoint a new government headed by respected economist Mario Monti, both countries have won some breathing space to get their economies into shape. 

"Equity markets are seemingly looking a little more kindly on Europe as we head into the weekend break with news of Berlusconi's accelerated departure, combined with progress from Greece over the formation of a coalition government, helping cheer stocks on a global basis," said Peter Stanhope, institutional trader at IG Index. 

 The FTSE 100 index was 0.7 per cent higher at 5,480. In the rest of Europe, Germany's DAX was up 1.3 per cent at 5,943 while the CAC-40 in France rose 0.9 per cent to 3,092. Italy's main index in Milan was also 1.1 per cent higher. 

Wall Street was heading for a perky opening, though trading volumes are expected to be light on Veteran's Day, when government effectively shuts down for the day. Dow futures were up 0.6 per cent at 11,927 while the broader Standard & Poor's 500 futures rose 0.7 per cent to 1,2475. 

The calm tone was also evident in the performance of the euro, which was 0.3 per cent higher at $1.3640, as well as the performance of Italian government bonds. The spike up in Italy's key borrowing rate to well over 7 per cent on Wednesday stoked fears that the eurozone's economy was heading for a Greek-style economic crisis. Only this time, the repercussions would be far worse as Italy's debt mountain of €1.9 trillion  appears too big for Europe's current bailout facility to handle. 

However, expectations that Monti will lead a post-Berlusconi government has helped calm those jitters, and Italy's ten-year bond yield was now down below the 7 pe rcent threshold that eventually forced Greece, Ireland and Portugal to seek bailouts. It fell another 0.17 percentage point today at 6.62 per cent. 

Italy is under intense pressure to prove it has a strategy to deal with its debts, which stand at 120 per cent of economic output — it has to rollover a little more than €300 billion of its debts next year alone. But economic growth is weak and the government failed to enact reforms to revive it over the past decade. 
 

AP

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'