Shares fall as doubts over EU crisis deal grow
LONDON, May 23 — European shares ended a two-day rally and German bond prices rose today, as a split between France and Germany over measures to tackle the euro-zone debt crisis and renewed speculation of a Greek exit from the 17-member currency bloc hit investor sentiment.
The euro, commodities and commodity-linked currencies all slid, while safe-haven demand lifted the dollar index measured against major currencies to 81.830, its highest level since September 2010.
The FTSE Eurofirst index of top European shares opened down 0.8 per cent at 985.76, after yesterday recording its biggest daily gain in a month.
An informal European leaders summit on later today is expected to discuss growth-boosting measures and the idea of a joint euro-zone bond. French President Francois Hollande supports the bond plan, but German Chancellor Angela Merkel is opposed.
“Today’s EU summit (is) already looking like a non-event as the only thing that looks certain to be achieved is the ‘agree to disagree’ stance on euro bonds between Chancellor Merkel and President Hollande,” said Jonathan Sudaria, a dealer at London Capital Group.
Germany’s auction of up to €5 billion (RM20 billion) of two-year bonds will be a key gauge of how investors view the situation in Europe as the bonds offer a zero per cent coupon.
German Bund futures were 53 ticks higher in early trading at 143.63, with cash 10-year yields 4 basis points lower at 1.435 per cent. — Reuters