European stocks fell again on Friday despite German approval of a euro zone rescue package, as markets remained unconvinced the aid would resolve the debt crisis.
The euro, however, found support from short covering.
Wall Street was also set to open lower, after plunging nearly 4 percent in the previous session.
In the general flight to safety bund futures extended their gains, up 28 ticks on the day to 128.59, with the German 10-year government bond yield hitting a record low at 2.656 percent.
“We are heading into the U.S. session here and the markets want to be better bid. The market is just anticipating more risk aversion trades … People are still shedding risk and risk assets,” a bond trader said.
World stocks as measured by the MSCI All-Country index .MIWD00000PUS were down 0.41 percent, with the more volatile emerging markets component .MSCIEF down 0.38 percent.
The euro continued to benefit from hedge funds scrambling to cover short positions and rose 0.32 percent to $1.2501.
Germany’s lower house of parliament approved a law allowing the country to make the biggest contribution to a 750 billion euro emergency debt package to help protect the euro, but markets remained troubled by what they perceive as poor co-ordination amongst European members in tackling the crisis.
European finance ministers were meeting later on Friday to discuss changes to budget rules to prevent another Greek-style debt crisis.
The FTSEurofirst 300 .FTEU3 index of top European shares was down 2.2 percent, extending sharp falls over the previous two sessions after Germany’s decision to ban naked short selling on some assets raised fears about a lack of coordination between European policymakers. The UK’s FTSE 100 .FTSE slipped below the key 5,000 mark for the first time since November 2009.
“Valuations have cheapened, but the underlying fundamental issues have not been addressed and will continue to dog risk asset markets in the months ahead,” said analysts at RBC Capital Markets in a note.
“The lack of political cohesion within the euro zone is becoming more apparent by the day and this can only undermine risk appetite and conviction in the longer-term outlook for investing in the region.”
FINANCIALS HAMMERED
Energy shares were among the biggest losers on concerns that any setback to economic growth would hit demand for oil as the oil price fell toward $70 a barrel. Financial stocks also took a hammering following Thursday’s approval by the U.S. Senate of a sweeping Wall Street reform bill.
Earlier in Japan, the Nikkei .N225 closed down 2.5 percent and lost 6.5 percent on the week, its biggest weekly drop in more than a year.
The euro, meanwhile, was also supported by rumors of possible central bank intervention to prop up the ailing currency.
“The intervention threat doesn’t have to feel realistic, when the market is in an extreme position even just a muttering (of intervention) can cause a reaction,” said Daragh Maher, senior currency analyst at Credit Agricole CIB.
The U.S. dollar .DXY was up 0.42 percent to 85.92 against a basket of currencies as investors sought safe-haven assets. U.S. Treasuries also benefited.
By Simon Falush
Tags: debt crisis, economy, economy recovery, euro zone, financial crisis, financial stocks, financial system, Global Economy, Global Financial, us economy, US Treasuries
Nice job…
I’m so happy to read this. This is the type of details that needs to be given and not the random misinformation that is at the other blogs. Appreciate your sharing this best doc….
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
Cool sites…
[...]we came across a cool site that you might enjoy. Take a look if you want[...]……
[...]The information mentioned in the article are some of the best available [...]……
[...]below you’ll find the link to some sites that we think you should visit[...]……
Related……
[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]……
Online Article……
[...]The information mentioned in the article are some of the best available [...]……
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
[...]The information mentioned in the article are some of the best available [...]……
[...]below you’ll find the link to some sites that we think you should visit[...]……
[...]The information mentioned in the article are some of the best available [...]……
[...]below you’ll find the link to some sites that we think you should visit[...]……
Recommended websites…
[...]Here are some of the sites we recommend for our visitors[...]……
[...]the time to read or visit the content or sites we have linked to below the[...]……
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Check this out…
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
Recommended websites…
[...]Here are some of the sites we recommend for our visitors[...]……
[...]The information mentioned in the article are some of the best available [...]……
[...]below you’ll find the link to some sites that we think you should visit[...]……
Read was interesting, stay in touch……
[...]please visit the sites we follow, including this one, as it represents our picks from the web[...]……
[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]……
[...]Here are some of the sites we recommend for our visitors[...]……
Wow!…
A very fascinating post. …
[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]……
[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]… …
Websites you should visit…
[...]below you’ll find the link to some sites that we think you should visit[...]……
Gems form the internet…
[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]……
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
Wow!…
A very awesome post. …
Recent Blogroll Additions……
[...]usually posts some very interesting stuff like this. If you’re new to this site[...]……
Useful site…
Check this site out as this site contains a lot of details that you may find useful….
Superb website…
[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]……
Websites worth visiting…
[...]here are some links to sites that we link to because we think they are worth visiting[...]……
Looking around…
While I was surfing yesterday I saw a great article concerning…
Windows 8…
[...]we like to honor other sites on the web, even if they aren’t related to us, by linking to them. Below are some sites worth checking out[...]…