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European market jitters on continued eurozone fears | |
(about 1 hour later) | |
European markets have reacted with uncertainty to continuing efforts to calm the eurozone debt crisis. | |
The new governor of the European Central Bank (ECB), Mario Draghi, has called for "urgent implementation" by governments of the latest measures. | |
The latest steps to approve Italy's new government, led by economist Mario Monti, appeared to cheer investors, with Milan's FTSE Mib up around 0.3%. | |
Other European markets were stable mid-morning, recovering from early losses. | |
New Italian Prime Minister Mario Monti won a confidence vote on Thursday night after outlining austerity measures aimed at restoring confidence in the country's economy. | |
A further vote in the lower house is expected on Friday. | |
Speaking in Frankfurt, ECB governor, Mr Draghi called for implementation of agreements to expand the European Financial and Stability Fund (EFSF) designed to help limit the spread of the crisis to Italy and Spain. | |
"Where is the implementation of these long-standing decisions? We should not be waiting any longer," said the Italian governor of the ECB. | |
Investors are awaiting details of how the size of the eurozone bailout fund will be boosted to 1tn euros (£855bn; $1.3tn). | |
Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full ECB role | Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. Glossary in full ECB role |
Earlier in the week, the head of the Bundesbank - Germany's central bank, which is officially subordinate to the European Central Bank - openly opposed the ECB coming to the rescue of troubled Italy and Spain. | Earlier in the week, the head of the Bundesbank - Germany's central bank, which is officially subordinate to the European Central Bank - openly opposed the ECB coming to the rescue of troubled Italy and Spain. |
German Chancellor Angela Merkel reinforced that stance on Thursday: "If politicians think the ECB can solve the euro crisis, then they are mistaken". | German Chancellor Angela Merkel reinforced that stance on Thursday: "If politicians think the ECB can solve the euro crisis, then they are mistaken". |
Many analysts believe that to stem contagion in the eurozone the ECB should act as "lender of last resort" and commit to buy up unlimited amounts of Italian and Spanish debt, instead of the limited interventions it has been carrying out so far. | |
France, whose AAA credit rating has come under pressure, has called for the ECB to take stronger action. | |
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Italy's 10-year bond yields fell slightly below 7% on Thursday, but it is thought this was due to the ECB buying up some Italian debt. | |
Worries | |
The European anxiety followed share price falls in the US and Asia. | |
Japan's Nikkei 225 index closed down 1.2%, while South Korea's Kospi fell 2%. The Dow fell 1.13%. | |
On Thursday, Spain's borrowing cost at an auction of 10-year bonds was almost 7%, which is a level seen as unsustainable. | |
A general aversion to risk infected most financial markets overnight. The price of Brent crude oil fell almost 4%. |