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Sunday, January 04, 2015, Poush 21, 1421, Robiul Awal 12, 1436 Hijr


European stocks morose at start of year
Published : Sunday, 4 January, 2015,  Time : 12:00 AM,  View Count : 8

LONDON, Jan 3: European stock markets and the euro made a morose start to the year on Friday, with the single currency sinking to four-year lows in response to fears of deflation.
The euro was hit by comments from ECB chief Mario Draghi, who said the risk of deflation in the eurozone was "not excluded" and that preparations were under way to ward off an onset of tumbling prices.
Europe's main indices ended the week firmly in the red, with London's benchmark FTSE 100 index losing 0.28 percent to 6,547.80 points compared with the close on Wednesday.
Frankfurt's DAX 30 declined 0.42 percent to 9,764.73 points and the CAC 40 in Paris slumped 0.48 percent to 4,252.29 points.
The markets were trading weak all day and only briefly turned positive when Wall Street opened in positive territory. But both Dow Jones and Nasdaq later reversed the trend and began sliding over lacklustre reports on US construction spending and manufacturing activity.
European markets, which had been shut Thursday, had steadied overall in 2014 compared with the previous year as companies balanced sluggish regional growth alongside low inflation and interest rates.
Borrowing rates in France, Spain and Italy meanwhile fell to historic lows in thin holiday trading, as investors were expecting the European Central Bank to start buying sovereign bonds to fight the threat of deflation.
--- Euro woes --- In foreign exchange deals on Friday, the euro took a hammering after Draghi's comments, while the dollar extended gains ahead of the release of US factory data and following a steady stream of good news from the world's biggest economy.
Europe's single currency weakened to $1.2018, down from $1.2097 on Wednesday.
"Draghi's dulcet dovish QE-tones were bad news for the euro, which already had a dominant dollar to contend with," said Connor Campbell, analyst at Spreadex traders.
While speculation reignited that Greece could exit the eurozone, Lithuania welcomed a New Year and a new currency on Thursday, becoming the last Baltic nation to adopt the euro in a bid to boost stability despite fears of inflation and eurozone debt woes.
Greece's parliament was dissolved Wednesday ahead of an early election watched warily by markets and international creditors concerned that the austerity-weary country could start unwinding unpopular fiscal reforms.
Prime Minister Antonis Samaras has warned that his financially-stricken nation may be forced out of the eurozone if the election is won by the radical leftist party Syriza which has vowed to reverse years of austerity imposed in return for financial aid.
"This month is already looking particularly important as a possible road map for the year ahead, with expectations high surrounding some form of European QE and the results of a Greek general election both due before the end of the month," said IG trading group analyst Alastair McCaig.
"Fears that a considerably more anti-austerity party will take over from Prime Minister Antonis Samaras and disrupt the fragile stability that currently exists around Europe look to be giving investors a more cautious trading mind set."
--- Gold dented --- PRECIOUS METALS: Gold fell slightly over the week, benefitting from it status as a haven investment amid Greece's political woes, while coming under pressure from a firmer dollar.
"This strong dollar was a blow to gold, as the yellow metal fell on the back of the US currency's stellar start to the year," said Campbell.
"Gold had a relatively stable, if uninspired, end to 2014, as oil drew most of the focus in the commodity sector. With the dollar continuing to negate the metal as a viable alternative investment, gold looks set to continue its poor performance trend in the short term."
Greece's parliament was dissolved Wednesday ahead of an early election watched warily by markets and international creditors concerned that the austerity-weary country could start unwinding unpopular fiscal reforms.
Prime Minister Antonis Samaras has warned that the financially-stricken nation may be forced out of the eurozone if the election is won by radical leftist party Syriza which has vowed to reverse years of austerity.
By Friday on the London Bullion Market, the price of gold fell to $1,172 an ounce from $1,177 on Wednesday of the previous week. Silver slipped to $15.71 an ounce from $15.77.
On the London Platinum and Palladium Market, platinum dipped to $1,193 an ounce from $1,199. Palladium decreased to $791 an ounce from $809.
BASE METALS: Base or industrial metals were mixed, with copper falling to a 4.5-year low of $6,230 a tonne following poorly-received Chinese data.
Analysts at broker Triland Metals noted that the "slowing growth rate in China is worrying the markets", adding that copper was pushed down also by lower output in Chile.
China's manufacturing growth dropped in December to its lowest level of 2014, an official survey showed Thursday, as the sector struggles with weak domestic demand.
By Friday on the London Metal Exchange, copper for delivery in three months dropped to $6,242.25 a tonne from $6,342.50 on Wednesday of the previous week. Three-month aluminium declined to $1,846 a tonne from $1,874.50.
Three-month lead edged up to $1,860.25 a tonne from $1,858.50. Three-month tin rose to $19,275 a tonne from $18,365. Three-month nickel retreated to $14,971 a tonne from $15,482.
Three-month zinc gained to $2,192.25 a tonne from $2,175. COCOA: Cocoa futures dropped on the prospect of higher output.
"The crops in West Africa are still thought to be big this year and have  changed ideas of a shortage of production into ideas of a small surplus," said Jack Scoville, analyst at broker Price Futures Group.    ?AFP







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