DTN News: Financial News March 26, 2010 ~ Markets Mixed After Greece Rescue Deal
Source: DTN News / AFP
(NSI News Source Info) LONDON, UK - March 26, 2010: The euro firmed on Friday but stock markets fell in a mixed and cautious reaction to an unprecedented EU plan to
rescue Greece from its debt crisis.
The European single currency climbed away from 10-month lows against the dollar reached on Thursday after the 16 eurozone countries agreed to offer Greece loans in combination with the International Monetary Fund.
That ended a policy spat between France and Germany that had been weighing heavily on the European currency in recent weeks as they tried to come up with a plan to help Athens put its public finances in order.
The euro was at 1.3381 dollars in early London deals, up from 1.3277 dollars in New York late on Thursday. Related article:ECB chief supports EU's Greek rescue plan
"The positive aspect of the (Greece) agreement is that following the long struggle, at least some form of agreement has now been reached," said Commerzbank analyst Ulrich Leuchtmann.
"That means that the dive in the euro against the dollar has been stopped for the time being. The agreement is however hardly reason for a significant correction."
Despite the relief brought by the agreement in Brussels, analysts said the euro would likely remain under pressure as market attention turns to other weak eurozone members such as Portugal, Ireland and Spain who face similar problems to Greece.
"The combination of the fact that Greece will have to borrow money only at market rates, ongoing worries about other EU countries' fiscal problems and ECB President (Jean-Claude) Trichet putting somewhat of a dampener on sentiment by criticizing IMF involvement in the deal, has kept the euro under pressure," Credit Agricole analyst Mitul Kotecha said on Friday.
"Although Trichet later reversed his comments, the damage was already done and any relief to euro/dollar will be short-lived."
European stocks markets meanwhile fell early Friday, with Frankfurt's DAX 30 index shedding 0.40 percent to 6,108.57 points in Germany, the eurozone's biggest economy.
The Paris CAC 40 lost 0.36 percent to 3,985.92 points and London's FTSE 100 index slid 0.39 percent to 5,705.32.
On Thursday, the FTSE closed at its highest level for 21 months, at 5,727.65 points following robust British retail sales data. Related article:EU's economic 'government' lost in translation
"Markets have given a lukewarm response to the EU rescue package," said ODL Securities stock markets analyst Owen Ireland.
"The negative momentum from a poor finish to the US markets (on Thursday) may be running over into today's session, so it will be the US GDP figures that will confirm today's direction," he added.
Immediately after the Greece deal was announced, the euro hit a fresh 10-month low of 1.3268 dollars, with investors concerned by comments from ECB head Jean-Claude Trichet, who said the plan to offer Greece loans involving the IMF was "very, very bad."
The single currency then recovered after Trichet clarified his comments and welcomed the Greek deal, including its IMF component.
Trichet hailed the EU plan to offer financial relief to Greece jointly with the IMF as both "workable" and "courageous."
"I'm happy that the heads of state and government could work out a solution to take coordinated action if needed," Trichet said after EU leaders approved the unprecedented EU-IMF tie-up to offer loans to Greece as "a last resort."
"It's a workable solution," Trichet said, adding that it had also been a "courageous one."
He added that in light of Greek efforts to reduce its ballooning deficit and debt, "I am confident the mechanism worked out ... will not need to be activated and that Greece will regain the confidence of the market."
Source: DTN News / AFP
(NSI News Source Info) LONDON, UK - March 26, 2010: The euro firmed on Friday but stock markets fell in a mixed and cautious reaction to an unprecedented EU plan to
rescue Greece from its debt crisis.
The European single currency climbed away from 10-month lows against the dollar reached on Thursday after the 16 eurozone countries agreed to offer Greece loans in combination with the International Monetary Fund.
That ended a policy spat between France and Germany that had been weighing heavily on the European currency in recent weeks as they tried to come up with a plan to help Athens put its public finances in order.
The euro was at 1.3381 dollars in early London deals, up from 1.3277 dollars in New York late on Thursday. Related article:ECB chief supports EU's Greek rescue plan
"The positive aspect of the (Greece) agreement is that following the long struggle, at least some form of agreement has now been reached," said Commerzbank analyst Ulrich Leuchtmann.
"That means that the dive in the euro against the dollar has been stopped for the time being. The agreement is however hardly reason for a significant correction."
Despite the relief brought by the agreement in Brussels, analysts said the euro would likely remain under pressure as market attention turns to other weak eurozone members such as Portugal, Ireland and Spain who face similar problems to Greece.
"The combination of the fact that Greece will have to borrow money only at market rates, ongoing worries about other EU countries' fiscal problems and ECB President (Jean-Claude) Trichet putting somewhat of a dampener on sentiment by criticizing IMF involvement in the deal, has kept the euro under pressure," Credit Agricole analyst Mitul Kotecha said on Friday.
"Although Trichet later reversed his comments, the damage was already done and any relief to euro/dollar will be short-lived."
European stocks markets meanwhile fell early Friday, with Frankfurt's DAX 30 index shedding 0.40 percent to 6,108.57 points in Germany, the eurozone's biggest economy.
The Paris CAC 40 lost 0.36 percent to 3,985.92 points and London's FTSE 100 index slid 0.39 percent to 5,705.32.
On Thursday, the FTSE closed at its highest level for 21 months, at 5,727.65 points following robust British retail sales data. Related article:EU's economic 'government' lost in translation
"Markets have given a lukewarm response to the EU rescue package," said ODL Securities stock markets analyst Owen Ireland.
"The negative momentum from a poor finish to the US markets (on Thursday) may be running over into today's session, so it will be the US GDP figures that will confirm today's direction," he added.
Immediately after the Greece deal was announced, the euro hit a fresh 10-month low of 1.3268 dollars, with investors concerned by comments from ECB head Jean-Claude Trichet, who said the plan to offer Greece loans involving the IMF was "very, very bad."
The single currency then recovered after Trichet clarified his comments and welcomed the Greek deal, including its IMF component.
Trichet hailed the EU plan to offer financial relief to Greece jointly with the IMF as both "workable" and "courageous."
"I'm happy that the heads of state and government could work out a solution to take coordinated action if needed," Trichet said after EU leaders approved the unprecedented EU-IMF tie-up to offer loans to Greece as "a last resort."
"It's a workable solution," Trichet said, adding that it had also been a "courageous one."
He added that in light of Greek efforts to reduce its ballooning deficit and debt, "I am confident the mechanism worked out ... will not need to be activated and that Greece will regain the confidence of the market."
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