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| Traders talking at the Madrid Stock Exchange. Madrid’s IBEX 35 index slid 1.44% to 6,528.40 points yesterday |
European stock markets and the euro wavered in cautious trading yesterday, a day after sharp losses and ahead of a key EU summit on how best to tackle the eurozone debt contagion.
At close, London benchmark FTSE 100 index of leading shares dipped 0.07% to 5,446.96 points. In Frankfurt, the DAX 30 edged up 0.07% to 6,136.69 points and in Paris the CAC 40 lost 0.30% to 3,012.71 points.
Madrid’s IBEX 35 index slid 1.44% to 6,528.40 points and Milan’s FTSE Mib fell 1.11% to 12,968 points.
US stocks also moved cautiously as investors digested another month of rising home prices in the troubled sector and a sweeping Moody’s downgrade of Spanish banks.
In midday trading, the Dow Jones Industrial Average fell 0.15%, the S&P 500-stock index was unchanged, while the tech-rich Nasdaq rose 0.17%.
“After a miserable start to the week, shares were able to shrug off some of the losses from the previous session with some support from German consumer sentiment surprising to the upside,” said Anita Paluch, a senior trader at Gekko Global Markets.
Top eurozone finance ministers meet in Paris yesterday in last-minute efforts to ensure that the summit this week launches the EU towards far greater integration and stops debt contagion fires in Spain.
Ambition is high and tension is growing ahead of the summit, with financial markets worried the outcome might again be disappointing in terms of credibility.
European Union leaders due in Brussels tomorrow are to consider proposals to eventually give EU authorities more power over eurozone national budgets, and to establish banking supervision across the single market.
The 17-nation eurozone is struggling to convince markets it can get to grips with spreading crises. The latest blows were a downgrading of 28 Spanish banks and a call for help from eurozone member Cyprus.
In foreign exchange deals on Tuesday, the euro dropped to $1.2472 from $1.2502 late on Monday in New York. The dollar fell to ¥79.4770 from ¥79.64.
“The markets aren’t holding out too much hope for a neat resolution to the sovereign debt crisis at this week’s EU summit,” said Kathleen Brooks, research director at online trading group Forex.com.
“Euro-dollar has been stuck in a very tight range in the last couple of days, which is a warning sign for traders: the outcome of this summit will be a major break-out event, either one way or the other for the single currency.”
Spain paid sharply higher borrowing rates in a sale of €3.077bn of short-term sovereign debt, the central bank said, a sign of high tension over its financial sector.