Euro deal may put floor on sell-off

EUROZONE leaders’ agreement to pursue stricter budget rules to preserve the euro may be just enough to put a floor on a sell-off in risk assets into year-end, if not to turn around investor sentiment completely.

Investors, however, are about to enter a period of Christmas-thinned liquidity, which can lead to sudden and explosive moves. Assumptions about calm or calmer markets need to be tempered.

All 17 members of the eurozone, and other EU countries aspiring to membership, agreed on Friday to forge ahead with stricter budget rules as part of efforts to tackle the debt crisis and tighten fiscal integration.