BUSINESSTUESDAY, JANUARY 6, 2015

LONDON: European stock markets fell yester-day and the euro struck a nine-year lowagainst the dollar with the ECB appearing oncourse to further prop up the euro-zone.

London’s benchmark FTSE 100 index slid0.12 percent to stand at 6,495.17 pointsapproaching midday in the British capital.Frankfurt’s DAX 30 dropped 0.42 percent to9,723.25 points and the CAC 40 in Paris shed0.72 percent to 4,221.69 compared withFriday’s close.

The euro slumped to $1.1864, the lowestlevel since March 2006, before recovering to$1.1922. That compared with $1.2002 late onFriday in New York. “It’s a new year but it’s thesame old story... Eurozone jitters get marketswobbling again,” said Jonathan Sudaria, adealer at London Capital Group. French

President Francois Hollande yesterday urgedGreece to abide by its European commit-ments, as the spectre of a Greek exit from theeuro-zone rears its head again.

Hollande’s comments came amid freshpolitical turmoil in Greece ahead of an elec-tion on January 25 that could be won by a far-left party. Over the weekend, the Der Spiegelweekly quoted German government sourcesas saying that Berlin sees a Greek exit from theeuro-zone as “almost inevitable” should theradical leftist Syriza party win the snap poll.

The euro’s losses meanwhile added to asell-off on Friday that came in response to aninterview with European Central Bank chiefMario Draghi in German business dailyHandelsblatt. “The euro hit a nine-year low...breaking below the key 1.20 level against the

dollar,” noted Alistair Cotton, a dealer atCurrencies Direct.

“The ECB is now expected to announcemore monetary stimulus... after Mario Draghiused an interview last week to suggest thegoverning council is preparing for sovereignbond purchases-which could begin as soon asJanuary 22.” Draghi had said that deflationwas a threat to the euro-zone and the ECBmust be prepared to counter it. He added thatthe risk that the central bank will not be ableto push inflation up “has increased comparedto six months ago”.

Greek exit? Political turmoil in Greece also weighed on

the euro. With a general election set forJanuary 25, the head of the radical leftist

Syriza party said Saturday that if he wonhe would start “necessary change” inEurope and end painful austerity poli-cies.

Markets see a rollback of measuresrequired under an IMF-EU bailout of thecountry as further weakening the euro-zone economy. “The euro remains weakon the back of Draghi’s newspaper com-ments heightening the prospect of theECB launching QE (stimulus) this month,although the Greek election result couldsee it delayed until February,” Mike van

Dulken, head of research at tradersAccendo Markets, said yesterday.

The European Central Bank hasalready used several tools to push infla-tion in the 19 members of the euro-zoneback up to the 2.0 percent annual rate itregards as healthy, including asset pur-chases and making cheap loans availableto banks. It is also currently examiningthe possibility of large-scale purchases ofsovereign debt, so-called “quantitativeeasing” or “QE”, to help jump-start theeuro-zone economy. — AFP

Euro hits 9-year low, European stocks drop

MANILA: Traders at the Philippine Stock Exchange blow horns to mark the first day oftrading for 2015, in the financial district of Manila yesterday. — AFP