PARIS — The dollar rose and stocks fell Monday in Europe, and Wall Street appeared to be headed for a weak opening, as politicians fumbled for a way forward in a crisis that has put Greece’s continued euro membership into serious doubt.
In another sign of the broader challenges facing the euro zone, Spanish and Italian bond yields rose sharply. Politicians from Greece’s fractured parties are making a last-ditch effort in Athens to form a government in the face of demands from creditors that they honor the country’s debts.
If they are unable to form a coalition, Greece will have to hold new elections, probably on June 17. In Brussels, finance ministers from European Union member states were planning to begin meeting at 5 p.m., with the Greek crisis expected to dominate discussions.
On Tuesday, after François Hollande is inaugurated as president of France, he will meet in Berlin with Angela Merkel, the German chancellor, and other European leaders to discuss their joint response to the continuing crisis.
Mr. Hollande has argued that austerity measures are being implemented too rapidly. A Greek exit from the euro has been looking increasingly likely.
Patrick Honohan, a member of the European Central Bank’s governing board, said Saturday that a Greek exit “is not necessarily fatal, but it is not attractive.”
Mrs. Merkel’s pro-austerity camp was dealt a setback Sunday, when her party was defeated in elections in Germany’s most populous state, possibly weakening her influence over the euro zone’s direction.
“In our view, what currently looks like a clash between growth fanatics and austerity fetishists will eventually end in a good European compromise with something for everyone,” Carsten Brzeski, an economist at ING in Brussels, wrote in a research note.
“The fiscal compact and the medium-term goal of balanced budgets should remain intact, but complemented by a new growth compact with European funds and initiatives.
However, even a growth compact can only support but not replace the ongoing structural reforms.” In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 2.6 percent, while the FTSE 100 index in London dropped 1.7 percent.
Trading in U.S. equity index futures indicated that Wall Street stocks would decline at the opening bell. The Standard & Poor’s 500-stock index fell 0.3 percent on Friday.
With the majority of equity trading now generated by the computer programs of big banks and investment funds, analysts caution against reading too much into daily stock moves as a reflection of market sentiment. The market turmoil was reflected in the market for sovereign bonds.
The yield on the Spanish 10-year bond soared 28 basis points to 6.24 percent. A basis point is one-hundredth of a percent.
Spain, which faces a growing banking sector crisis in addition to an economy hobbled by deep unemployment, sold €2.9 billion of 12- and 18-month Treasury bills on Monday, just short of the €3 billion it had been aiming to sell.
Among the securities the government sold Monday were €2.2 billion of 12-month Treasury bills, priced to yield 2.985 percent, up sharply from the 2.623 percent at which it sold similar securities last month.
Italy, meanwhile, sold about €5.3 billion of debt , including €3.5 billion of three-year bonds priced to yield 3.91 percent — little changed from its last such auction in April.
The yield on the existing Italian 10-year bond rose 25 basis points to 5.73 percent. German 10-year government bond prices rose, pushing yields down by 7 basis points to 1.44 percent, as nervous investors piled into the assets, which are widely seen as the safest in the euro zone.
Investors seeking safe haven from the euro also bought United States, British and Swiss bonds, pushing down their yields, as well. Even as European officials seek a solution to the political impasse, the economic situation is showing signs of worsening.
Eurostat, the statistical office of the European Union, said Monday that industrial production in the euro zone fell 0.3 percent in March from February, confounding market expectations of a small gain.
U.S. crude oil futures fell 2 percent to $94.23 a barrel, in their first foray below the $95 level since December. Comex gold futures fell 0.7 percent to $1,584.00 an ounce.
The dollar was stronger across the board. The euro fell to $1.2866 from $1.2917 late Friday in New York, while the British pound ticked down to $1.6064 from $1.6069. The dollar rose to 80.05 yen from 79.93 yen, and to 0.9333 Swiss francs from 0.9299 franc.Asian shares were mixed.
The Tokyo benchmark Nikkei 225 stock average rose 0.2 percent, and the Sydney market index S.&P./ASX 200 added 0.3 percent. But in Hong Kong, the Hang Seng index lost 1.2 percent, and in Shanghai the composite index fell 0.6 percent.
nytimes.com
In another sign of the broader challenges facing the euro zone, Spanish and Italian bond yields rose sharply. Politicians from Greece’s fractured parties are making a last-ditch effort in Athens to form a government in the face of demands from creditors that they honor the country’s debts.
If they are unable to form a coalition, Greece will have to hold new elections, probably on June 17. In Brussels, finance ministers from European Union member states were planning to begin meeting at 5 p.m., with the Greek crisis expected to dominate discussions.
On Tuesday, after François Hollande is inaugurated as president of France, he will meet in Berlin with Angela Merkel, the German chancellor, and other European leaders to discuss their joint response to the continuing crisis.
Mr. Hollande has argued that austerity measures are being implemented too rapidly. A Greek exit from the euro has been looking increasingly likely.
Patrick Honohan, a member of the European Central Bank’s governing board, said Saturday that a Greek exit “is not necessarily fatal, but it is not attractive.”
Mrs. Merkel’s pro-austerity camp was dealt a setback Sunday, when her party was defeated in elections in Germany’s most populous state, possibly weakening her influence over the euro zone’s direction.
“In our view, what currently looks like a clash between growth fanatics and austerity fetishists will eventually end in a good European compromise with something for everyone,” Carsten Brzeski, an economist at ING in Brussels, wrote in a research note.
“The fiscal compact and the medium-term goal of balanced budgets should remain intact, but complemented by a new growth compact with European funds and initiatives.
However, even a growth compact can only support but not replace the ongoing structural reforms.” In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 2.6 percent, while the FTSE 100 index in London dropped 1.7 percent.
Trading in U.S. equity index futures indicated that Wall Street stocks would decline at the opening bell. The Standard & Poor’s 500-stock index fell 0.3 percent on Friday.
With the majority of equity trading now generated by the computer programs of big banks and investment funds, analysts caution against reading too much into daily stock moves as a reflection of market sentiment. The market turmoil was reflected in the market for sovereign bonds.
The yield on the Spanish 10-year bond soared 28 basis points to 6.24 percent. A basis point is one-hundredth of a percent.
Spain, which faces a growing banking sector crisis in addition to an economy hobbled by deep unemployment, sold €2.9 billion of 12- and 18-month Treasury bills on Monday, just short of the €3 billion it had been aiming to sell.
Among the securities the government sold Monday were €2.2 billion of 12-month Treasury bills, priced to yield 2.985 percent, up sharply from the 2.623 percent at which it sold similar securities last month.
Italy, meanwhile, sold about €5.3 billion of debt , including €3.5 billion of three-year bonds priced to yield 3.91 percent — little changed from its last such auction in April.
The yield on the existing Italian 10-year bond rose 25 basis points to 5.73 percent. German 10-year government bond prices rose, pushing yields down by 7 basis points to 1.44 percent, as nervous investors piled into the assets, which are widely seen as the safest in the euro zone.
Investors seeking safe haven from the euro also bought United States, British and Swiss bonds, pushing down their yields, as well. Even as European officials seek a solution to the political impasse, the economic situation is showing signs of worsening.
Eurostat, the statistical office of the European Union, said Monday that industrial production in the euro zone fell 0.3 percent in March from February, confounding market expectations of a small gain.
U.S. crude oil futures fell 2 percent to $94.23 a barrel, in their first foray below the $95 level since December. Comex gold futures fell 0.7 percent to $1,584.00 an ounce.
The dollar was stronger across the board. The euro fell to $1.2866 from $1.2917 late Friday in New York, while the British pound ticked down to $1.6064 from $1.6069. The dollar rose to 80.05 yen from 79.93 yen, and to 0.9333 Swiss francs from 0.9299 franc.Asian shares were mixed.
The Tokyo benchmark Nikkei 225 stock average rose 0.2 percent, and the Sydney market index S.&P./ASX 200 added 0.3 percent. But in Hong Kong, the Hang Seng index lost 1.2 percent, and in Shanghai the composite index fell 0.6 percent.
nytimes.com
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