Eurozone bank deadline, growth fears put markets on edge
Thursday, 1 July 2010
LONDON, June 30 (AFP): World stock markets were under strain Wednesday over a deadline for European banks to repay 442 billion euros in crisis funding and an ominous drop in confidence in global recovery prospects.
Just days after Group of Twenty (G20) world leaders pledged in Toronto to slash state debt and nurture a shaky rebound, markets plunged Tuesday on heightened concern over a double-dip global recession after a wave of poor economic data.
European equities clawed back limited ground Wednesday, gaining around 0.75 per cent in London, 0.58 per cent in Frankfurt and 0.73 per cent Paris,
But sentiment was fragile as investors worried about the health of the eurozone banking sector.
Stock markets were given a supporting hand mid-morning when the European Central Bank said it would make available a record amount of 131.933 billion euros (162 billion dollars) in three-month loans. It said that 171 banks had requested funds, the day before the big deadline for repayment of 12-month loans.
And the European single currency crept upwards to 1.2213 dollars in morning deals, compared with 1.2186 dollars late in New York Tuesday.
Sentiment has been plagued by concerns about a liquidity shortfall when a special European Central Bank (ECB) lending facility expires, potentially leaving financial institutions with funding difficulties.
Eurozone banks must repay 442 billion euros (539 billion dollars) to the ECB Thursday, which could leave a liquidity shortfall with borrowing costs jumping.
The looming deadline, alongside economic jitters, prompted many investors to sell assets that are regarded as risky, like equities and the euro.
Just days after Group of Twenty (G20) world leaders pledged in Toronto to slash state debt and nurture a shaky rebound, markets plunged Tuesday on heightened concern over a double-dip global recession after a wave of poor economic data.
European equities clawed back limited ground Wednesday, gaining around 0.75 per cent in London, 0.58 per cent in Frankfurt and 0.73 per cent Paris,
But sentiment was fragile as investors worried about the health of the eurozone banking sector.
Stock markets were given a supporting hand mid-morning when the European Central Bank said it would make available a record amount of 131.933 billion euros (162 billion dollars) in three-month loans. It said that 171 banks had requested funds, the day before the big deadline for repayment of 12-month loans.
And the European single currency crept upwards to 1.2213 dollars in morning deals, compared with 1.2186 dollars late in New York Tuesday.
Sentiment has been plagued by concerns about a liquidity shortfall when a special European Central Bank (ECB) lending facility expires, potentially leaving financial institutions with funding difficulties.
Eurozone banks must repay 442 billion euros (539 billion dollars) to the ECB Thursday, which could leave a liquidity shortfall with borrowing costs jumping.
The looming deadline, alongside economic jitters, prompted many investors to sell assets that are regarded as risky, like equities and the euro.