View the article online at http://citywire.co.uk/money/article/a545725
FTSE decline extends to day nine; Merkel says 'nein' to eurobonds
Index suffers its second longest losing streak in history as German chancellor says jointly guaranteed eurobonds are ‘not needed and not appropriate'.
Britain’s FTSE 100 erased early gains on Thursday to fall for a ninth day, its second longest losing streak in history, after German chancellor Angela Merkel rejected ‘eurobonds’ as a solution to the eurozone’s growing debt crisis.
The UK index of blue-chip shares slid 0.24%, or 12 points, to 5,128 – down from a day high of 5,184 – and the All Share index edged down 0.15%, or four points, to 2,644.
See the FTSE’s performance and the index’s top winners and losers
‘Germany’s staunch refusal to step up to the plate and take the responsibility of being Europe’s paymaster is causing investor sentiment to erode away day by day,’ said Angus Campbell at Capital Spreads.
Merkel earlier said jointly guaranteed eurobonds were ‘not needed and not appropriate,’ speaking at a press conference with Italian prime minister Mario Monti and French president Nicolas Sarkozy in Strasbourg.
She warned that eurobonds would ‘would weaken us all’, adding: ‘It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.’
Other stock markets in Europe also slipped: Germany’s DAX index was 0.54% lower at 5,428; France's CAC 40 index inched down 0.01% to 2,822; and the FTSEurofirst 300 index of top European shares lost 0.14% to 901.
Meanwhile, French borrowing costs neared a 28-month high and Italian borrowing costs hovered above 7%, around levels at which other eurozone nations were forced to seek bailouts.
And the yield, or implied interest rate, on German 10-year bunds rose nine basis points to a one-month high of 2.19%, overshooting that on 10-year UK gilts, 2.16%, in a sign that the debt crisis is leaking to the eurozone’s very core.
‘Germany is caught between a rock and a hard place,’ said John Higgins, economist at Capital Economics. ‘If she rides to the rescue of her neighbours, she will undermine her own credit standing. If she chooses not to, the eurozone will probably collapse.’
He added that upward pressure on bund yields from the ‘unsavoury dilemma’ was unlikely to relent in the near future.
'Top Stocks' in the news
News sponsored by:
After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
More about this:
Look up the shares
More from us
- Eurobonds are no ‘quick fix’ to Europe’s debt crisis
- FTSE falls again as markets turn guns on German debt
- FTSE Share Prices & Performance
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.