On Tuesday, stocks in Europe and the euro remained steady after acute sell offs on letdown related to the past week’s European Union summit. However, any increases would not be maintained for too long because of worries regarding the credit rating downgrade and the condition of the banking sector.
Traders revealed that to get rid of the single currency on any news of bouncing back, there were some clear bias, after warnings of more credit downgrades were issued since leaders of the European Union were not successful in coming up with a stringent measure to tackle the ongoing debt crisis of the region effectively.
FTSEurofirst 300, the main stock index in Europe, increased by 0.5 percent, after it dropped by 1.9 percent the previous day. On equity markets, banking stocks might be seen returning to center stage after people close to the matter revealed that Commerzbank, lender from Germany, and the government have been talking for many days regarding a state aid.
On the other hand, Moody’s, a ratings agency, put eight banks in Spain on review for a potential credit ratings downgrade. The banks that were put on review included CaixaBank, Banco Sabadell, Bankinter and Bankia.
The STOXX 600 Banks Index, which comprises of companies from Europe which are involved in the financial, banking sector, dropped by 1.5 percent from the value it closed at on Monday. In Asia, the euro reached two month lows as it settled at a value of $1.3160, but was later saved by some small covering that settled its value around $1.3170.
On the other hand, price of benchmark oil increased, going above $98 a barrel, whereas the dollar depreciated against the yen and euro. In terms of stocks, FTSE 100 of Britain increased by 0.5 percent, as it settled at a value of 5452.76, while DAX of Germany increased by 0.8 percent to settle at a value of 5830.93, while CAC-40 of France increased by 0.6 percent to settle at a value of 3108.22.
