Belfast Telegraph

Friday 11 July 2014

Markets in turmoil as bid to save euro rages

Financial markets had another nervous day yesterday as German Chancellor Angela Merkel made an impassioned appeal to other world leaders to tighten controls over the banks and assist her efforts to “save the euro”.



In Frankfurt, the Dax index fell by 2.9%. In Paris, the Cac 40 index was down nearly 3.5%. The euro traded 1% down at around $1.23. The FTSE 100 traded 2.6% lower at one point, while in New York the Dow Jones index opened 2.5% down.

Despite her own unilateral move to ban “naked short selling” of eurozone government bonds in Germany, Chancellor Merkel said that she wanted G20 leaders to hurry the process of international agreement on |financial reform by their summit in Canada on June 26.

The German leader declared: “People are asking: ‘What powers do you politicians still have?' The Group of 20 nations agreed every product, every actor and every |financial centre must in future be regulated. That's what we promised the people. Now, one and a half or two years later, |people are asking what happened. At some point we have to deliver.”

But it was the pound that was the centre of negative attention yesterday. Investors expressed worries about the new Government, which were not assuaged by the publication of the formal coalition agreement. They pushed sterling down to near a 14-month low versus the dollar, and it tracked another slide in the euro.

German Finance Minister Wolfgang Schauble was even more outspoken in an interview yesterday: “I'm convinced the markets are really out of control. That is why we need really effective regulation, in the sense of creating a properly functioning market mechanism.”

Mr Schauble meets his 15 eurozone counterparts in Brussels today to present a “nine-point plan” to halt future fiscal crises.

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