Market Commentary and Intraday News
Markets steady as focus remains on Spain, Greece
264 days ago
By PAN PYLAS
AP Business Writer
(AP:LONDON) Financial markets recovered their poise Thursday, a day after investors were spooked by rising levels of discontent in Greece and Spain over upcoming austerity packages.
Though the mood in markets has improved modestly, investors remain concerned about developments in Europe, where Greece and Spain have witnessed violent protests against debt reduction measures they are due to announce this week.
In Greece, the leaders of the three parties that make up the coalition are meeting again to decide on more spending cuts that the country must impose to keep receiving vital rescue loans. The meeting is taking place a day after more than 50,000 anti-austerity protesters took to the streets of Athens.
Greater focus will probably center on Spain, where the government is due to unveil new austerity policies amid mounting concerns over the country's economic future.
Recession-hit Spain has come under pressure to tap a bond-buying program from the European Central Bank that has been partly designed to keep a lid on the country's borrowing costs. But the government has been reluctant to request the help for fear of the conditions attached.
That has unnerved markets, ending the recent weeks' relative calm in markets.
"You have to admire European politicians for their consistent ability to be able to snatch defeat from the jaws of victory," said Gary Jenkins, managing director of Swordfish Research.
Spain's new austerity package, which is due to be unveiled toward the end of the European trading session, comes in the wake of a violent protest in Madrid and big falls in Spanish stocks.
Worries that the Spanish government is losing control continued to hurt the country's markets. The main IBEX index in Madrid was down 0.5 percent at 7,817 while the yield on the country's 10-year bonds spiked up to 6 percent, not far off levels that are considered unaffordable.
"There is still a lot of caution in the markets today due to the increasing uncertainty surrounding Spain," said Craig Erlam, market analyst at Alpari.
Elsewhere, Europe's main markets pushed higher but the gains were dwarfed by Wednesday's losses.
The FTSE 100 index of leading British shares was up 0.3 percent at 5,787 while Germany's DAX rose 0.5 percent to 7,311. The CAC-40 in France was 0.7 percent higher at 3,438.
Wall Street was poised for modest gains as well, with Dow futures and the broader S&P 500 futures up 0.3 percent.
The steadier tone was evident in other financial markets, too. The euro was flat at $.1.2860 while the benchmark New York oil price rose 22 cents to $90.21 a barrel.
The market gains started earlier, in Asia, helped by expectations the People's Bank of China will soon take more steps to ease a slowdown in the world's No. 2 economy.
Hong Kong's Hang Seng climbed more than 1.1 percent to 20,762.29 and mainland China's Shanghai Composite Index jumped 2.6 percent to 2,056.32. The smaller Shenzhen Composite Index also gained 2.6 percent to 837.96.
Japan's Nikkei 225 rose about 0.5 percent to 8,949.87, a day before the release of industrial production and retail sales figures.
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