News Column

Europe shares poised for first weekly drop since April

June 27, 2014

Concerns about Iraq and Ukraine and subdued economic data left European shares facing their first week of losses since early April on Friday and nudged gold towards a two-month high.

Other safe-haven assets including the yen, Swiss franc and German government bonds were also in demand as investors took a step back from the riskier bets that have remained firmly in vogue this year.

Fighting between Iraqi forces and insurgents raged in the home town of former dictator Saddam Hussein, while Russia warned of "grave consequences" as Ukraine signed a trade and political agreement with the European Union.

Gold hovered around $1,315 U.S. an ounce as it closed in on a fourth straight weekly gain, as the fallout from Thursday's weak U.S. consumer spending figures also hurt the dollar.

While the geopolitical tensions weighed, there was the comfort that the disappointing U.S. data could keep interest rates at record lows for a longer period of time - meaning markets struggled for clarity.

Stock markets in London, Frankfurt and Paris rose slightly in morning trading though the recent selloff was set to bring a 10-week run of unbroken gains to an end.

Investors were also digesting an unexpected drop in euro zone business and consumer confidence data and awaiting German inflation numbers, both important for the European Central Bank's future policy.

The decline confirmed PMI data earlier this month which showed the 18-country bloc's economic recovery was stuck in low gear and adds urgency to European Union leaders' attempts to accelerate growth.

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Source: Baystreet Global Markets (Canada)

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