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Markets lower as ECB President looks for action

The end of a negative week was marked by yet more red on the UK’s blue chip index, making it five straight days of losses as eurozone bond yields, whilst lower than their peaks last week, remained at elevated levels. It came as new ECB president Mario Draghi urged politicians to implement the reforms of the European Financial Stability Facility (EFSF), questioning where the decisive actions were that had previously been agreed and promised. Combined with rumours that the ECB had once again been active in the secondary bond markets of Italy and Spain today, the news provided some support to the Euro, which hit a five week low against the Japanese Yen yesterday.

Additionally, the UK and German leaders met in Berlin to discuss a variety of issues, including Iran and Syria, as well as the more obvious eurozone situation and a proposed financial transaction tax. It was apparent that deep divides still existed on the latter issue, which would disproportionately hurt the UK given London’s position in the global financial services industry. It was also evident that opinions differed on the solution to the current crisis, Cameron’s suggestion of a bazooka being dismissed by Germany who apparently favours a “step-by-step” approach.

Markets across Europe lost between 3% and 5% this week, the UK at the lower end of this following today’s 60.2 point (1.1%) loss. This ensured the index ended at 5363, a key level as it rested on its 50 day moving average.

This was posted in Bdaily's Members' News section by John Dance .