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Euro, shares ease off highs as Spanish concerns weigh

Published: August 6, 2012 | 7:56 am
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European shares retreated from four-month highs and the euro edged down from a one-month peak on Monday as investors grew cautious over the prospects of a bailout for Spain, with its 10-year bond yield holding close to 7 percent danger levels.

Markets had rallied last week after robust U.S. jobs data eased concerns about global growth, and the European Central Bank outlined a plan to buy the bonds of heavily indebted euro zone nations to ease funding pressures on their governments.

But President Mario Draghi said the ECB would act only in cooperation with the euro zone bailout funds, and would require countries to ask for help first.

Spanish Prime Minister Mariano Rajoy has signaled he may seek a full-blown aid package, but has not yet made a decision on the matter.

“Italy or Spain would have to ask for help (for the ECB to act), so this is not something that’s imminent, but at least some headache for the equity markets has been lifted,” said Gerhard Schwarz, head of equity strategy at Baader Bank.

The FTSEurofirst 300 index .FTEU3 of top European company shares eased 0.3 percent early on Monday to 1,078.35 points, but this followed a 2.5 percent rise on Friday which marked its ninth consecutive weekly gain.

In the Spanish debt market 10-year bond yields eased slightly by 2 basis points to trade around 6.91 percent.

The euro slipped 0.15 percent in European trading to $1.2370 having climbed as far as $1.2444 earlier in Asia, its highest level since July 5.


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