Global stock markets plunged Friday as deepening concerns over the euro pushed the currency to 18-month lows, while gold prices hit record highs as investors sought safety, dealers said.Skip related content They said sentiment turned sharply in the afternoon as US markets opened weaker despite solid economic data, with early losses snowballing in Europe as hopes that the eurozone will sort out its debt nightmare faded badly. Madrid, Milan, Lisbon -- all seen as weaker eurozone members left vulnerable in the fallout from the Greek debt crisis -- posted losses of around five percent or more. "We have seen investors continue to move money out of the banks and miners and into the safe havens of the US dollar and gold," said City Index analyst Joshua Raymond in London. London was down some 2.6 percent at around 1400 GMT, with Paris losing 3.6 percent and Frankfurt nearly two percent as the markets ended a turbulent week that began with the promise of a EU-IMF trillion-dollar rescue package. On Wall Street, the blue-chip Dow Jones Industrial Average slumped 1.43 percent at the open, extending heavy losses, while the tech-rich Nasdaq composite plunged 2.15 percent. US stocks were under pressure "as festering fears regarding the euro-area's debt crisis and the impact of measures being implemented to try to restore sustainable fiscal policy on the global recovery" undercut sentiment, Charles Schwab & Co analysts said in a client note. The euro dived to 1.2424 dollars at 1400 GMT, striking its lowest level since November 13, 2008, and appeared set for further weakness as investors lost faith that the EU-IMF package and austerity measures can halt the slide. Analysts at Capital Economics in London said they could see the euro falling to parity with the dollar in time if things continued as they were. "We now expect it to fall to 1.10 dollars this year and to parity against the dollar by the end of 2011. That might seem like a very strong call," they wrote. "But let's not forget that the euro spent almost three of the first four years of its life below parity. If there is any possibility at all that its life may be coming towards an end, we see no reason why it should not drop to similar levels." Markets were also hit after Paul Volcker, a special adviser to President Barack Obama and a former Federal Reserve chairman, reportedly warned of the "potential disintegration" of the euro, according to analysts. "Clearly, I think we have to say that the euro failed and fell into a trap that was evident at the beginning," Volcker said at an event in London. "I think Europe's going to have to decide in the end whether to get more integrated or to get less integrated, in which case the euro is the question." Gold soared to fresh highs near 1,250 dollars an ounce as investors sought a safe-haven in the precious metal amid mounting concerns the net result of the eurozone crisis will be a return to recession. The shared eurozone unit has been slammed by concerns about the ability of eurozone nations such as Greece, Portugal and Spain to impose severe austerity measures to rein in soaring public deficits. "The euro remains soft and further weakness is likely," VTB Capital economist Neil MacKinnon told AFP. "This reflects continuing investor unease over eurozone debt problems -- despite the EU-IMF bailout -- as well as concerns about the expansion in the ECB's balance sheet, particularly after the ECB's recent U-turn in purchasing eurozone government bonds." He added that ECB intervention in the foreign exchange market "cannot be ruled out but I doubt that it would be effective." Asian markets were also dragged lower by the eurozone crisis on Friday, with Tokyo falling 1.49 percent, Hong Kong down 1.36 percent and Sydney shedding 0.89 percent. "Investors are having to recognise that as (eurozone) economies start to get to grips with the important fiscal cuts needed to reign in deficits, consumers will have less cash to spend and this could impact on company earnings and economic growth," Raymond said. LONDON (ShareCast) - 1605: Markets everywhere are showing heavy losses as investors face up to the reality of severe austerity packages. London is being dragged down by concern over the health of the eurozone where civil unrest is growing as more countries unveil big cutbacks. In London, Wolseley (LSE:WOS.L - news) is the stand-out riser but Capita is the only other stock in the blue. Miners lead a procession of fallers with Xstrata (LSE: XTA.L - news) , Kazakhmys (LSE: KAZ.L - news) and ENRC the biggest losers. 1500: Losses have widened in the 1355: Xstrata is the worst performer in a downbeat Midday: Footsie (news) remains under pressure amid concerns that the European debt crisis has not been staved off. Banks and miners are the worst performers. Barclays leads banks lower. The diversified miner Xstrata is the worst performer, in line with weak commodity prices. Fellow miners Vedanta, Kazakhmys and 1105: Footsie is posting triple digit losses now as banks fall after the new government outlined plans to curb their activities and miners face pressure from weak metals prices. Wolseley is one of just handful of risers after the builders' merchant doubled trading profit during the third quarter and predicted full-year profit will beat forecasts of £374m. 0915: Wolseley is one of just handful of risers after the builders' merchant doubled trading profit during the third quarter and predicted full-year profit will beat forecasts of £374m. Miners and banks are the weakest stocks with Xstrata and Barclays leading their respective sectors lower. 0830: London has made a poor start with banks under pressure again on concerns over the new government's plans. Lloyds and Barclays are both down. Miners are also lower. Wolseley is by far the best performer as the builders' merchant doubled trading profit during the third quarter and predicted full-year profit will beat forecasts of £374m. Stocks, euro plunge as gold hits record heights
RELATED PHOTOS / VIDEOS
Market overview: Footsie down 146
Friday, 14 May 2010
16:21, Friday 14 May 2010
Posts
