PARIS : World stocks and the euro dropped again on Monday amid fears over Hungary’s state finances and the global recovery. Tokyo stocks dived 3.8 percent and European markets all suffered sharp falls on opening. The euro fell to a new four-year low point around 1.19 dollars.
Hungary’s attempts to distance itself from fears of a Greek-style fiscal crisis did not convince markets. The worse-than-expected jobs figures released in the United States at the end of last week also weighed heavily on trading.
Tokyo dived 3.84 percent, or 380.39 points, to 9,520.80 as the weaker yen hit exporters, while Sydney shed 2.78 percent, or 123.5 points, to 4,325.9. Other Asian markets wre also dragged down.
In Europe, London was down 1.45 percent, with the FTSE-100 74.3 points lower at 5,051.7 just an hour after opening.
The Paris CAC-40 was down more than two percent at 3,381.73 points, the Frankfurt DAX by 1.05 percent to 5,876.48, Milan’s FTSE Mib index showed a fall of 2.12 percent to 18,337 points, the main Athens index was down three percent at mid-morning.
The euro crumbled to 1.1876 dollars at one stage — its lowest point since March 2006 — before recovering to 1.1924 in Asian afternoon trade, still down from 1.1967 in New York on Friday.
Analysts highlighted the widespread fears about the state of the world economy that was roiling markets. Europe’s debt, worries about the impact of the stronger yen on Japan’s exports and the strength of the US recovery all took a toll on trading.
Credit Agricole strategists said the euro could fall as low as its January 1999 introduction level of 1.1830 dollars later Monday.
“This week is unlikely to see a let-up in pressure on risk trades,” they said in a note, adding that there were growing questions on Germany’s commitment to the Greek rescue package by the EU and IMF.
“The constitutional court potentially blocking Germany’s contribution will only add to the pressure on the euro,” it said.
ING Credit said in a note: “The Hungarian deficit alarm has brought credit markets back to square one.”
Mizuho Corporate Bank market economist Daisuke Karakama said: “I understand well why (market players) don’t want to hold the euro now. They don’t know what bad news will come out next.”
“The news on Hungary showed getting a bailout and being able to rehabilitate state coffers are two different things,” said Karakama, adding that investors would be reflecting on how this may apply to the recent bailout for Greece.
Oil fell in Asian trade due to concerns about falling demand. New York’s main futures contract, light sweet crude for delivery in July, dropped 1.55 dollars to 69.96 dollars a barrel.
Brent North Sea crude for July delivery shed 96 cents to 71.13 dollars.
And gold opened at 1,216.50-1,217.50 US dollars an ounce in Hong Kong, up from Friday’s close of 1,205.00-1,206.00 dollars as dealers looked for safer assets
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