Euro and stocks slip as investors fear instability after German election

The euro and European government bond yields slipped after the EU’s most powerful leader, German Chancellor Angela Merkel, won a fourth term but faced a fractured parliament as support for the far right surged.

Investors were unnerved by the prospect of months of coalition talks that could distract from negotiations with Britain over its divorce from the EU and efforts to integrate the bloc’s remaining members.

Some analysts said the political uncertainty may also throw into question ECB plans to reduce monetary stimulus, a move likely to be announced at the ECB’s next meeting on October 26.