European Stocks Slide On Tension Over Syria
LONDON (AFP) – European equities fell on Tuesday as investors ignored solid data from Germany and eyed possible U.S. military intervention in Syria, sending the price of safe-haven gold soaring.
In afternoon trading in London, the FTSE 100 index of leading shares dropped 0.64 percent to stand at 6,450.56 points, as dealers in returned to their desks after a three-day holiday weekend for Britain.
“Markets are tanking in Europe today, as Syria related risk-aversion prevails,” said trader Anita Paluch at Gekko Markets. “The outlook of a military action in relation to the use of chemical weapons is clearly dampening risk appetite.”
The CAC 40 index in Paris shed 2.23 percent to 3,976.44 points going beneath 4,000 points for the first time since August 1, and Frankfurt’s DAX 30 sank 1.49 percent to 8,309.10 as Syria concerns overshadowed news of buoyant German business confidence.
At open, Wall Street also slumped with the Dow Jones Industrial Average down 0.40 percent and the tech-heavy Nasdaq losing 1.13 percent.
The European single currency eased to $1.3338, from $1.3369 late in New York on Monday.
Sterling fell against the euro to 86.06 pence for one euro and against the dollar to $1.5499.
Global oil prices advanced over concerns about renewed instability in the crude-rich Middle East region, with Brent oil hitting a near six-month high close to $112 a barrel.
And gold prices rallied to $1,411 an ounce, up from $1,377.50 the previous session, as many investors parked their cash in the commodity seen as a safe bet in times of unrest.
Wall Street stocks had fallen on Monday after US Secretary of State John Kerry warned that the United States would demand “accountability” after an “obscene” chemical weapons attack on Syrian civilians.
The sell-off came immediately after Kerry said the US was still examining evidence of the use of chemical weapons in Syria but left no doubt that Bashar al-Assad’s regime would be blamed.
Talk of war in the Middle East upstaged solid data out of Germany where the German business confidence rose for a fourth consecutive month in August, boosted by a stronger export outlook in Europe’s top economy.
The Ifo economic institute’s closely watched business climate index rose to 107.5 points this month from 106.2 in July.
He added: “Unsurprisingly, the concerns over Syria have completely overshadowed the positive data out of the eurozone,” said analyst Craig Erlam at traders Alpari.
In Asia on Tuesday, Hong Kong equities slid 0.59 percent and Tokyo shed 0.69 percent, but Sydney eked out a slender gain of 0.11 percent.
Emerging markets also remained under the spotlight due to lingering concern that tighter U.S. monetary policy could spark massive outflows of foreign cash back to the West.
The Turkish lira fell to a record low level early on Tuesday, plunged to 2.033 in mid-morning, though it later stood at 2.0269 lira.
Turkey is caught up in a currency turmoil that is also spreading across emerging economies in Asia, Latin America, Russia and South Africa as investors pull out some funds because of the imminent change in the US monetary climate as well as in global interest rates.
Hungary’s central bank (MNB) cut its main interest rate to a record low level of 3.8 percent from 4.0 percent after 12 monthly quarter-point cuts in a row.
In India, the rupee also plunged to a new low, posting one of its sharpest-ever single-day falls.
The rupee fell to a lifetime low of 66.30 rupees to the dollar, slipping past its previous low of 65.56 last Thursday.