Greek and Spanish turmoil hits euro

The euro slipped along with world stocks yesterday as deepening turmoil in Greece and Spain kept investors wary of riskier assets, with weak US economic data adding to the cautious mood.

Worries about the health of Spain’s banks also resurfaced after a report that customers at Bankia had withdrawn more than €1bn from their accounts in the past week, though theSpanish government said that there had been no exit of deposits from the lender.

The report followed suggestions that customers of Greek banks were moving funds in anticipation of its exit from the euro, adding to anxiety among investors about the lack of a firm plan to deal with the region’s worsening crisis.

“The whole equities market is being driven by a macro trade based upon contagion fear in Europe, and really the problem is undercapitalised banks there,” said chief investment officer at Harbor Advisory Corp, Jack de Gan.

Adding to eurozone jitters was ongoing political turmoil in Athens, where politicians rejecting harsh austerity measures are likely to win June 17 elections.

The euro was last at $1.2694, down 0.2%, and near a four-month low of $1.2681 hit on Wednesday.

The single currency has already shed 3.9% in May, coming close to its 2012 trough of $1.2624 reached in mid-January.

Global shares, as measured by MSCI’s world equity index, slipped 0.3%, while US stocks edged lower.

The Dow Jones industrial average was down 23.08 points, or 0.18%, at 12,575.47. The Standard & Poor’s 500 Index was down 2.24 points, or 0.17%, at 1,322.56. The Nasdaq Composite Index was down 8.70 points, or 0.30%, at 2,865.34.

The pan-European FTSE 300 index was down 0.9%, while the Irish index of shares, the ISEQ, was down 58.47 points to 3,026.01.

US government bond prices rose. The benchmark 10-year US Treasury note was last up 3/32, with the yield at 1.7466%.

— Reuters


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