Markets steady after being roiled by EU confusion
- Article by: PAN PYLAS
- Associated Press
- March 26, 2013 - 5:20 AM
LONDON - European markets steadied Tuesday, a day after they were roiled by a suggestion from a leading European finance official that the Cyprus bailout was a model for the future.
After initially greeting the bailout of Cyprus, stocks and the euro sank on reports that Jeroen Dijsselbloem, who chairs the meetings of the finance ministers of the 17 European Union countries that use the euro, said the Cyprus bailout was a template.
Though he later attempted to retract his comments and described Cyprus as a "specific case with exceptional challenges," Dijsselbloem has left the impression that those with bank deposits above the uninsured level of (EURO)100,000 may be tapped in any future bailout.
"Dijsselbloem may have done his utmost yesterday to initiate global panic in financial markets .... but fortunately the downside for equities has been relatively contained, at least for now," said Fawad Razaqzada, market strategist at GFT Markets.
In Europe, the FTSE 100 index of leading British shares was up 0.1 percent at 6,385 while Germany's DAX rose 0.3 percent to 7,894. The CAC-40 in France was 0.7 percent higher at 3,754.
The euro was up 0.1 percent at $1.2867. In the immediate aftermath of the Cyprus bailout on Monday morning, Europe's single currency had managed to race above $1.30.
The focus will likely remain on the fallout from the Cyprus deal, especially as the country's banks are all scheduled to stay closed until Thursday.
Before a late Monday night decision, all but the Bank of Cyprus and Laiki, were due to reopen on Tuesday, having been closed for 10 days. No reason has been given for the further delay but fears of a bank run are thought to have played a role in the decision.
"Continued uncertainty within the eurozone is likely to limit gains," said Lee Mumford, a financial sales trader at Spreadex.
Wall Street was poised for a steady opening, with both Dow futures and the broader S&P 500 futures up 0.2 percent. A raft of U.S. economic data later, including monthly durable goods orders and consumer confidence figures could have an impact on how U.S. markets perform.
Earlier in Asia, Japan's Nikkei 225 index fell 0.6 percent to close at 12,471.62. Hong Kong's Hang Seng rose 0.3 percent to 22,311.08. Australia's S&P/ASX 200 dropped 0.8 percent to 4,950.20. South Korea's Kospi rose 0.3 percent to 1,983.70.
Mainland Chinese shares fell, with the Shanghai Composite Index losing 1.2 percent to 2,297.67 while the smaller Shenzhen Composite Index lost 0.7 percent to 953.36. Losses were attributed to moves by the government to cool off the real estate sector.
Oil prices edged higher alongside most global equities, with the benchmark New York rate up 39 cents at $95.20 a barrel.
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