The euro has strengthened versus the dollar for the first time in four days of trading due to the leaders of Germany and France meeting today. The euro had earlier fallen to an 11-year low versus the yen ahead of a report today that economists thought would show industrial production in Germany, Europe’s biggest economy, declined in November.
However signs of improvement in the German economy helped offset concerns over the prospects for euro zone debt auctions later this week, lifting the currency and European shares on Monday. German exports jumped 2.5 percent in November, data showed on Monday, unexpectedly widening the trade surplus in a sign Europe’s largest economy is still outpacing peers.
Europe can avoid a recession this year and there are reasons to be more upbeat about prospects for the region, South Africa’s Business Day newspaper quoted International Monetary Fund head Christine Lagarde as saying. Some analysts believe a recession is inevitable in the euro zone, where several member states have grappled with sovereign debt problems for months, triggering global risk aversion which has hit emerging markets such as South Africa the hardest…
[quote]The euro-zone scene has changed massively over the last 18 months or so there are reasons to be a little bit more upbeat about the prospects. Our assessment is that even if some of the euro-zone countries are in a recession technically for some or all of 2012, the whole of the zone might not technically be in a recession. You’ve got very different economies cruising at different growth rates. That is going to have an impact on the entire euro zone and might avoid recession for the euro zone at large.[/quote]
European Union President Herman Van Rompuy told Belgian broadcaster RTBF.
[quote]Europe is slowly but surely mastering the debt crisis, even if a solution has taken longer than hoped. We’ll put this crisis behind us, but it has taken longer than we hoped for. We often acted a bit late and our decisions were often a bit too weak. But in most cases, we’ve worked in the right direction.[/quote]
Greece should leave the euro zone and devalue its new currency unless Europe is willing to provide “massive” funding for the indebted country, Czech central bank Governor Miroslav Singer said in a newspaper interview.
[quote]If there is not the will to give Greece a massive amount of money from European structural funds, I do not see any other solution than its departure from the euro zone and a massive devaluation of the new Greek currency. So far Greece has been given loans that served mainly for buying time and for rich Greeks to move their money out of the country. This lowers the trustworthiness of Europe and the willingness of non-European countries to lend or provide new capital to the International Monetary Fund for helping Europe. In connection with the Greek crisis, it will possibly be necessary to pour money even into quite large banks which will suffer losses. It is necessary to immediately focus on banks’ problems. This is however hitting awful obstacles in large European countries. There are politicians who said strong words – never, never never.[/quote]
Market Overview
The euro rose 0.4 percent to trade at $1.2769 at 9:46 a.m. Frankfurt time. The single currency has extended its decline versus the U.S. dollar last year, sliding 1.5 percent so far this year. The Euro Stoxx 50 Index rose 0.3 percent. U.K. stocks pared gains, leaving the FTSE 100 Index little changed at 5,654.08 at 9:09 a.m. in London. The gauge earlier rallied as much as 0.4 percent.
Market Snapshot
The Hang Seng and CSI markets closed significantly higher in the Asian session, the HS closing up 1.47% and the CSI closing up 3.40% ( still 25.2% down year on year). the ASX 200 closed down 0.08%. Europe’s bourse indices have had mixed fortunes in the early part of the morning session. The STOXX 50 is up 0.36%, the UK FTSE is up 0.01%, the CAC is up 0.37%, the DAX down 0.27% and the IBEX is up 1.18% this morning the leader on the board for the key European indices.
The pound fell versus the euro for the first time in four days after a report showed Britons’ concern about losing their jobs soared to a record last month. The pound fell 0.3 percent to 82.68 pence per euro at 9:18 a.m. London time, after touching 82.22 pence, the strongest since Sept. 10, 2010. It was little changed at $1.5431 per dollar. Sterling fell to the weakest in three months against the yen before trading little changed at 118.67.
An index of job security fell to minus 33 from minus 21 in November, the unit of Lloyds Banking Group Plc said in an e- mailed report in London today. Lloyds’ index of consumers’ inflation expectations dropped 5 points from November to 65, the lowest reading since December 2009.
There are no significant economic releases be published this afternoon that could affect the sentiment of the trading session.
