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European markets rise in early trading | |
(about 1 hour later) | |
European shares have risen slightly in early trading, as another day of volatile trading is expected due to continuing concerns about the high levels of eurozone debt. | |
The FTSE 100 was up 0.5%, while France's Cac had added 0.4% and Germany's Dax rose 0.7%. | |
Shares had earlier also fallen in Asia, with Japan's Nikkei 225 index up 2%. | |
Analysts expect market volatility to continue as policymakers try to find a solution to the debt problem. | Analysts expect market volatility to continue as policymakers try to find a solution to the debt problem. |
'European disease' | |
A core concern over the high levels of government debt in the eurozone is how it will affect the banking sector. | |
Greece is continuing with plans to ask banks and other private holders of its government bonds to swap them for others that pay a lower rate of interest over a longer period. | |
The fear is that other nations, such as Spain and Italy, may ultimately be forced to follow the Greek lead. | |
On Monday, Deutsche Bank's outgoing chief executive, Josef Ackermann, said on Monday that some European banks would go bust if they were forced to recognise in their accounts the existing losses on government debts they own, based on current market prices for government bonds. | |
Banking stocks were among the early fallers, with Commerzbank 2.5% lower, Credit Agricole down 1.1% and Barclays losing 0.8%. | |
However, other banks saw their shares rise, with Deutsche Bank adding 1.4%. | |
"It's the European disease that is infecting markets all around the world at the moment," said Michael Heffernan of Austock Group. | "It's the European disease that is infecting markets all around the world at the moment," said Michael Heffernan of Austock Group. |
Economy fears | |
Concerns are also growing over the state of both the European and US economies. | |
Data on Monday by research group Markit showed that service sector activity in the UK almost stagnated in August, while business confidence in the eurozone fell at its fastest rate last month since the 2008 collapse of Lehman Brothers. | |
Revised eurozone economic growth data is due out later. | |
In the US, fears have been gathering pace that the world's biggest economy could slip into a recession. | |
Data out last week showed that no new jobs were added to the US economy in August. To make matters worse, the White House warned that the unemployment rate in the US was likely to stay at about 9% till the end of 2012. | |
"The market will continue to tread water this week until we get more details from US President Barack Obama to stabilise [the] labour sector," said Kim Byung-youn of Woori Investment & Securities. | |
President Obama is scheduled to deliver a key speech on 8 September to outline his much-anticipated jobs creation plan. | President Obama is scheduled to deliver a key speech on 8 September to outline his much-anticipated jobs creation plan. |