While you were sleeping: Euro-zone troubles linger

Published: Tue 23 Nov 2010 07:40 AM
While you were sleeping: Euro-zone troubles linger
November 23 (BusinessDesk) - Equities on Wall Street and in Europe fell as Ireland’s bailout failed to stem concern about the single currency-zone's financial crisis.
As the European Union and International Monetary Fund started to work out the details of a loan package to Ireland, expected to total about 80 billion euros (US$109.8 billion) to 90 billion euros, the country’s government began to fall apart.
The Green Party, Irish Prime Minister Brian Cowen’s junior coalition partners, today called for a January election, while two independent lawmakers said they might not support the budget, scheduled for December 7.
“There seems to be a creeping realisation that this won’t necessarily mark the end of the euro-zone sovereign-debt crisis,” London-based Will Heddon, a sales trader at IG Index, told Bloomberg News. “This lack of conviction from traders is resulting in the early support ebbing away.”
In early afternoon trading, the Dow Jones industrial average dropped 1.23%, the Standard & Poor's 500 Index fell 1.16% while the Nasdaq Composite Index declined 0.61%.
Exxon Mobil and Chevron Corp dragged the Dow lower as oil weakened. U.S. crude oil futures for January delivery fell 38 cents to US$81.60 barrel by 1453 GMT, giving up earlier gains.
In Europe, the Stoxx 600 shed 0.7% to 267.74 at the 4:30 p.m. close in London. National benchmark indexes dropped in all 18 western European markets except Iceland.
Bank of Ireland Plc led the decline in bank stocks, plunging 19%, as Moody’s Investors Service today warned a “multi-notch” downgrade to Ireland’s Aa2 credit rating was “most likely”.
The euro also fell, weakening against 13 of 16 major counterparts, as investors worried that the Irish rescue package won’t end the single currency zone’s troubles in Portugal and Spain.
The euro weakened 0.6% against the U.S. dollar to US$1.3608.
"The market is skeptical as there are still fiscal issues with Portugal and Spain. Investors have been undecided on the euro for a while now and I can see that uncertainty lasting into year-end," Jane Foley, senior currency strategist at Rabobank in London, told Reuters.
The Dollar Index, which measures its value against a basket of currencies, advanced 0.42% to 78.83.
Gold was steady, paring earlier gains. Spot gold gained 0.1% to US$1,355.20 an ounce at noon.
U.S. gold futures for December delivery rose US$2.50 to US$1,354.80.
"Obviously, there are concerns about weakness of the Irish government, but above and beyond that, what's weighing on gold is the U.S. dollar, which has strengthened," Peter Buchanan, senior economist of CIBC World Markets, told Reuters.

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