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Macroeconomic News
GLOBAL MARKETS-Euro, stocks lower after ECB downplays bond report
Mon, 20th Aug 2012 13:42
By Marc Jones
LONDON, Aug 20 (Reuters) - Shares and the euro fell on
Monday after the Eu
report that its new crisis fighting plan could include buying
euro zone countries' bonds if their borrowing costs breached
certain levels.
Germany's central bank, the Bundesbank, had also earlier
reiterated its opposition to bond purchases and a spokesman for
the German finance ministry said it was not aware of any plans
for the ECB to target bond spreads.
European and global markets have had a recent strong run on
hopes that the plan being drawn up by the ECB, the central bank
overseeing the 17 countries that use the euro, could help the
currency bloc tackle its debt crisis.
Top European stocks were down 0.2 percent by 1145
GMT after the ECB responded to the report in Germany's der
Spiegel.
'It is absolutely misleading to report on decisions, which
have not yet been taken and also on individual views, which have
not yet been discussed by the ECB's Governing Council,' the ECB
said.
The main stock indexes in the region were also down, with
the exception of Germany's Dax.
The MSCI global share index moved into the
red, trading down at 0.02 percent while U.S.
stock index futures pointed to a mixed open
on Wall Street.
The euro fell to $1.23012 down 0.25 percent on the
day and to a session low of 97.79 yen.
'We are fishing in the fog at the moment so we need to see
some more of the meat regarding the ECB's plans,' said
Heinz-Gerd Sonnenschein, equities strategist at Germany's
Postbank.
'Shares have risen a lot since June even though the earnings
outlook has been downgraded, so progress from here very much
depends on the sovereign debt crisis,' he said.
Investor appetite for Spanish, Italian and other peripheral
debt has picked up, at the expense of German bonds, and they
held on to much of their gains after the ECB's comments.
Spanish two-year yields have already fallen sharply since
ECB President Mario Draghi said on July 26 that the bank would
do whatever it takes to preserve the euro, fuelling expectations
the central bank would restart its bond buying programme.
However, policymakers remain in the early stages of
thrashing out the details of any plan.
Some experienced ECB watchers were already doubting whether
the central bank would set a bond price threshold as European
laws ban it from financing governments.
'Critical details about such a new instrument remain unclear
- at least until the ECB's September meeting,' said Commerzbank
strategists in a note.
GREECE MEETING
With many European policymakers on summer holidays,
investors have had a respite from negative headlines.
This week's focus is on a meeting between leaders of Greece
and Germany on Friday as well as details of Spain's 'bad bank'
plans, due to be announced on the same day.
The first August reading of closely watched, forward looking
purchase manager index (PMI) data will come out from the euro
zone on Thursday.
Minutes from the most recent meeting of the U.S. Federal
Reserve due out on Wednesday are also on investors' radar.
Away from Europe's equities and bond markets, oil prices
hovered at $114 per barrel, supported by tight North Sea
supplies ahead of the closure of a key UK oilfield for
maintenance and on expectations of more demand before the
northern hemisphere winter.
Platinum rose to its highest in more than six weeks as
supply worries lingered after violence at a major mine in South
Africa, while gold firmed a touch.
Corn prices rose to their highest in more than a week,
resuming a recent rally on supply concerns arising from the U.S.
grain belt's worst drought in 56 years.
Wheat edged in the other direction as the market took a
breather after gaining for three straight sessions on fears of
tightening global supplies and expectations of curbs on exports
from the Black Sea region.
(editing by Anna Willard)
(marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, Aug 20 (Reuters) - Shares and the euro fell on
Monday after the Eu
ropean Central Bank poured cold water on a
report that its new crisis fighting plan could include buying
euro zone countries' bonds if their borrowing costs breached
certain levels.
Germany's central bank, the Bundesbank, had also earlier
reiterated its opposition to bond purchases and a spokesman for
the German finance ministry said it was not aware of any plans
for the ECB to target bond spreads.
European and global markets have had a recent strong run on
hopes that the plan being drawn up by the ECB, the central bank
overseeing the 17 countries that use the euro, could help the
currency bloc tackle its debt crisis.
Top European stocks were down 0.2 percent by 1145
GMT after the ECB responded to the report in Germany's der
Spiegel.
'It is absolutely misleading to report on decisions, which
have not yet been taken and also on individual views, which have
not yet been discussed by the ECB's Governing Council,' the ECB
said.
The main stock indexes in the region were also down, with
the exception of Germany's Dax.
The MSCI global share index moved into the
red, trading down at 0.02 percent while U.S.
stock index futures pointed to a mixed open
on Wall Street.
The euro fell to $1.23012 down 0.25 percent on the
day and to a session low of 97.79 yen.
'We are fishing in the fog at the moment so we need to see
some more of the meat regarding the ECB's plans,' said
Heinz-Gerd Sonnenschein, equities strategist at Germany's
Postbank.
'Shares have risen a lot since June even though the earnings
outlook has been downgraded, so progress from here very much
depends on the sovereign debt crisis,' he said.
Investor appetite for Spanish, Italian and other peripheral
debt has picked up, at the expense of German bonds, and they
held on to much of their gains after the ECB's comments.
Spanish two-year yields have already fallen sharply since
ECB President Mario Draghi said on July 26 that the bank would
do whatever it takes to preserve the euro, fuelling expectations
the central bank would restart its bond buying programme.
However, policymakers remain in the early stages of
thrashing out the details of any plan.
Some experienced ECB watchers were already doubting whether
the central bank would set a bond price threshold as European
laws ban it from financing governments.
'Critical details about such a new instrument remain unclear
- at least until the ECB's September meeting,' said Commerzbank
strategists in a note.
GREECE MEETING
With many European policymakers on summer holidays,
investors have had a respite from negative headlines.
This week's focus is on a meeting between leaders of Greece
and Germany on Friday as well as details of Spain's 'bad bank'
plans, due to be announced on the same day.
The first August reading of closely watched, forward looking
purchase manager index (PMI) data will come out from the euro
zone on Thursday.
Minutes from the most recent meeting of the U.S. Federal
Reserve due out on Wednesday are also on investors' radar.
Away from Europe's equities and bond markets, oil prices
hovered at $114 per barrel, supported by tight North Sea
supplies ahead of the closure of a key UK oilfield for
maintenance and on expectations of more demand before the
northern hemisphere winter.
Platinum rose to its highest in more than six weeks as
supply worries lingered after violence at a major mine in South
Africa, while gold firmed a touch.
Corn prices rose to their highest in more than a week,
resuming a recent rally on supply concerns arising from the U.S.
grain belt's worst drought in 56 years.
Wheat edged in the other direction as the market took a
breather after gaining for three straight sessions on fears of
tightening global supplies and expectations of curbs on exports
from the Black Sea region.
(editing by Anna Willard)
(marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
