Euro Dips But European Shares Gain On Spanish Deal

Limited progress at a euro zone finance ministers meeting left the single currency near a two-year low on Tuesday, while oil fell $2 a barrel after a slowdown in China’s imports fuelled anxiety about the global economy.

But European shares ended four straight sessions of losses, inching up 0.2 percent to 1032.12 points .FTEU3 led by banks, after the finance chiefs ratified a deal to rescue Spanish lenders.

The euro zone ministers agreed to grant Spain an extra year until 2014 to reach its deficit reduction targets and set the parameters of an aid package for Madrid’s ailing banks. But they made no apparent progress on how the bloc’s new rescue fund, the ESM, will be used to intervene in bond markets.

“With the (euro zone) finance ministers’ meeting out of the way without proving to be a source of inspiration for risk assets, the focus of the market now turns to the German constitutional court,” said Chris Weston, an institutional dealer with IG Markets.

The German court is due to give its preliminary ruling on the complaints against the European Stability Mechanism (ESM) and the euro zone’s fiscal compact, which may ultimately lead to a further implementation delay.

The euro, which hit a two-year low of $1.2225 on Monday, fell 0.1 percent to $1.2298.

Brent was down 1.8 percent at $98.51 a barrel with worries over supply disruptions also easing as a labor strike in Norway’s oil industry ended.
Reuters