Euro Sinks To 9-Year Low Over Greece Jitters
Frankfurt (Jan 5) The euro sank to a nine-year low Monday as new doubts surfaced about Greece's commitment to the common currency bloc. European stocks mostly rose while Asian markets were mixed.
KEEPING SCORE: The euro was trading at $1.1951 after falling to $1.1862, its lowest since December 2005. The drop was triggered by a Der Spiegel report which citing unnamed officials said German Chancellor Angela Merkel no longer believes it would be too risky for the 19-member eurozone if Greece dropped the currency. In stock market trading, France's CAC 40 was up 0.3 percent at 4,262.89 and Germany's DAX was slightly higher at 9,768.55. Britain's FTSE 100 gained 0.3 percent to 6,565.52. Futures augured a flat start on Wall Street, with Dow and S&P 500 futures both little changed.
EURO JITTERS: Upcoming elections in Greece that might be won by the anti-austerity Syriza party have renewed doubts about whether the country will stick to the terms of its international bailout and stay in the euro bloc. Germany has warned Greece against reneging on the bailout conditions should Syriza win this month's general election. Responding to the Der Speigel report, a spokesman for Merkel said there is no change in German policy and the government expects Greece to fulfil its obligations under the EU, ECB and IMF bailout. The euro has also been under pressure from expectations the ECB will expand monetary stimulus.
THE QUOTE: "Greece could spoil the party in coming weeks as talk of a 'Greek exit' resurfaces. The past year has been hard enough for the European Central Bank as the region fought severe economic challenges and attempted to resuscitate growth," said Stan Shamu, market strategist at IG in Melbourne, Australia. "Investors will be monitoring polls very closely heading into the elections. Opposition party Syriza has already started being vocal, talking about a Greek debt haircut and cancelling the austerity measures and bailout package."
ASIA SCORECARD: Asian markets wavered between gains and losses, with most major benchmarks ending down. Hong Kong's Hang Seng dropped 0.6 percent to 23,721.32 and Japan's Nikkei fell 0.2 percent to 17,408.71. China's Shanghai Composite jumped 2.1 percent to 3,350.52. Australia's S&P/ASX 200 added 0.3 percent to 5,450.30. Markets in Taiwan, South Korea and Singapore also fell. The dollar dropped to 120.36 yen from 120.48 yen Friday.
ENERGY: Oil prices extended their months-long slide. Benchmark U.S. crude was down 90 cents at $51.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 58 cents to $52.69 on Friday. Oil is down from $106 a barrel in June as global demand slackened while supplies remained high. Brent crude was down 91 cents to $55.51 a barrel on the ICE exchange in London.
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