Europe stock markets mixed as euro sinks to 12-year low

London’s benchmark FTSE 100 index yesterday gained 0.59% to close at 6,761.07 points led by mining shares.

AFP/LondonEurope’s main stock markets finished the day mixed yesterday as the euro sank to a 12-year low against the dollar which could see it lurching closer to parity. The euro dropped to $1.0495 – the lowest level since January 2003. It later recovered slightly to $1.0601, up from $1.0548 late on Wednesday in New York. The CAC 40 in Paris closed down 0.21% to 4,987.33 points, and Frankfurt’s DAX 30 index slipped 0.06% to 11,799.39 points from Wednesday’s record close. On the upside, London’s benchmark FTSE 100 index gained 0.59% to close at 6,761.07 points led by mining shares. “The London market is outperforming its European counterparts as easing rumours out of China have made mineral stocks move higher, following heavy losses in recent sessions,” said David Madden, market analyst at IG trading group. “Beijing is looking to relax its lending policies to stimulate economic activity and this has given a second wind to the battered mining sector.” The euro, which has shed about 13% of its value this year, has meanwhile been losing further ground in recent days as the European Central Bank has embarked on a policy of so-called quantitative easing. The QE stimulus plan will see it buy €1.14tn worth of bonds over the next 18 months. The aim is to pump liquidity into the system so as to ward off deflation and spur growth in the single currency area. But QE has its critics, particularly in Germany, who argue that it reduces the pressure on eurozone governments to get their finances and economies in order. “The combination of Greece’s renewed problems and the onset of deflation is a very toxic one for the eurozone,” Jonathan Loynes, analyst at Capital Economics research group, said in a note to clients. “At best, it is likely to keep economic growth in the region fairly subdued. At worst, it could fully re-ignite the crisis and blow the currency union apart.” Officials from Greece’s creditors returned to Athens yesterday for their first time since the hard-left Syriza party came to power, with the radical new government denying it had allowed back the hated “troika” it had vowed to shun. Athens – which has been scrabbling for cash to meet its next major debt repayments – insisted it had not been strong-armed into submission. The ECB has meanwhile bought 9.8bn euros in eurozone bonds in the first three days of its QE programme, a senior official said yesterday. Standing apart from the rest was Ireland, whose economy powered ahead at the fastest rate in the European Union last year, as the eurozone nation staged a strong recovery after exiting its bailout programme, data showed yesterday. Irish gross domestic product soared 4.8% in 2014, after the nation emerged from an international bailout in late 2013, the Central Statistics Office (CSO) said in a statement. That was far higher than the EU average of 1.3% and the eurozone average of just 0.9%. Wall Street stocks jumped in mid-day trade after big US banks cleared Federal Reserve stress tests. The Dow Jones Industrial Average gained 1.02%, while the broad-based S&P 500 rose 0.90% and the tech-rich Nasdaq Composite Index added 0.51%.