EUROPEAN STOCK MARKETS have opened down this morning, on the first full day of trading after the German parliament’s landmark vote to add another €78bn to the European bailout fund.
The Bundestag voted yesterday by an overwhelming majority to increase its contribution from €123bn to €211bn – causing a brief rally in European shares, which rescinded over the course of the day to leave shares flat at the end of the day.
American markets performed well – the Dow Jones picked up 1.3 per cent yesterday – but Asian markets were less enthused, with markets in Tokyo and Singapore virtually unchanged, while Hong Kong lost 2.5 per cent.
This morning European markets have continued their mediocre performance, with the main markets in London, Paris and Frankfurt all in negative territory.
The FTSE 100 index opened down by 0.75 per cent, while the CAC 40 in Paris fell by 0.66 per cent and the DAX was off by 1.25 per cent. In Dublin, the ISEQ index opened down around 0.65 per cent.
On the currency markets the Euro has retained its slump, worth around $1.3517 against the dollar and trading at £0.8681 sterling.
On the bond markets, Spanish and Italian borrowing costs are down somewhat, but still remain dangerously high: Italy yesterday sold a new batch of 10-year bonds at 5.86 per cent, up from 5.22 per cent only a month ago.
This morning, second-hand Italian bonds are yielding 5.544 per cent; the Spanish equivalent is yielding 5.076 per cent.
The continued unease in the markets is a symptom of uncertainty about whether Greece can win the support of the EU and IMF for its latest austerity drive, and guarantee its next €8bn in bailout loans.
Greece’s prime minister George Papandreou today meets French president Nicolas Sarkozy to discuss the country’s debt crisis, while inspectors from the EU and IMF continue talks with the Greek government over securing the next batch of loans.
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