European debt crisis: Live

Stock markets fell again this morning as Europe’s policymakers scrabble to come up with a rescue plan to hold the eurozone together 8.45am: We’ve also seen a startling plunge in the price of gold and silver this morning. The spot price of gold tumbled to as low as $1,534 per ounce this morning, a fall of over $100 per ounce. Back on 6 September, it was trading above the $1,900 mark. Silver was even more badly hit – slumping from $31.04 per ounce to just $26.04 per ounce. That’s a 16% drop in value, in just a few hour’s trading. There are three reasons for today’s sharp falls • The US dollar has strengthened overnight, which typically pushes down the price of assets priced in dollars. Despite America’s own debt issues, investors can’t break the habit of treating the greenback as the Safe Haven par excellence • There’s also a general ‘dash for cash’, as firms sell their precious metal assets raise funds to cover losses elsewhere • The upfront cost of trading in both metals has just risen, with CME Group raising the cash deposit it demands from traders who buy gold and silver futures . That should deter speculators, and may encourage them to quit the gold market. 8.20am: You might think that the prospect of a €2trn warchest to save the Eurozone would spark a rally in shares, rather than another early selloff. The reason, it appears, is that many in the City aren’t convinced that the plan can be put together, having witnessed months of bickering and indecision among Europe’s leaders. Michael Hewson, market analyst at CMC Markets, was encouraged that EU leaders are preparing to enlarge their current bailout fund, along with talk of recapitalising Europe’s banks and guiding Greece into an “orderly default”. However, he warns that the plan will probably need to be approved by every eurozone member – which is the reason that the “Save Greece” agreement hammered out on 21 July still hasn’t been approved. Hewson is also disappointed by the latest pronouncements from the leaders closest to the situation: Markets are likely to remain sceptical while EU officials continue to utter contradictory statements — with ECB member and Bank of France governor Christian Noyer stating that there was no need for a recapitalisation of French banks. German chancellor Angela Merkel also added to the uncertainty with mixed messages on German TV last night as she continued to walk a fine line with the German voters, saying that a euro area insolvency cannot be ruled out, and at the same time saying that Greece cannot be allowed to default. 8.15am: Far Eastern markets markets have also suffered today. Some markets are still trading, but right now every one is down on the day — this round-up of the Asian markets is splattered with red electronic ink. Japan’s Nikkei has closed at its lowest level since April 2009. It tumbled by 186 points, or 2.17%, to 8,374.13. The worst performer is the Jakarta Composite index, which is down 5.5% today in late trading. Indonesia’s exports trade is dependent on natural resources – a global slowdown will erode demand for products such as oil, gas and coal. 8.05am: European stock markets have just opened – with another bout of heavy selling. The FTSE 100 index fell by 92 points, sending the blue-chip index slumping back through the 5,000 point mark to 4974 points. Mining companies are the biggest fallers in the City, driven by those fears of a global slowdown and the recent falls in commodity prices. There are similar falls in other European markets – the French CAC fell 2% at the open, with Germany’s DAX down 1.3%. That looks like a pretty vigorous thumbs-down to the Washington DC talks, and the failure to develop a solid plan to end the turmoil. 7.45am: Six weeks to solve the crisis. That was George Osborne’s stark warning last Friday , after world stock markets had been battered by fears that the world is heading for a new recession. Three days later, and the clock is ticking. Last night, high-level talks in Washington DC between top finance ministers and International Monetary Fund officials broke up without any clear signs of a deal. There is talk of creating a €2tn warchest to rescue Europe’s struggling countries, but no clear idea how this will happen. Financial markets will give their verdict on the Washington talks today – the early reaction from Asia has not been favourable, with most markets falling sharply. Investors in London are predicting more losses here too – but trading is likely to be volatile. We’ll bring you all the key developments in the European debt crisis today. Let us know what you think too, below the line… European debt crisis Euro Banking Stock markets Europe IMF Ed Balls George Osborne Market turmoil Graeme Wearden guardian.co.uk

Posted by on September 26, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.