Europe's Crisis From Damaging

(Reuters) - World stocks and the euro fell on Wednesday as investors shunned riskier assets on worries about Greece's possible departure from the euro zone, which would deepen the region's debt crisis and hurt an already fragile global economy. Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, three euro zone sources told Reuters, citing an agreement reached by officials. A scramble for low-risk investments enabled Germany to pay no interest on a new two-year debt issue amid the absence of new measures from a European leaders' summit in Brussels to tackle the region's debt crisis. "The markets are on edge and sensitive to every possible out-of-control scenario coming out of Europe," said Peter Boockvar, equity ...

(Reuters) - World shares fell and Germany sold two-year bonds paying virtually no interest on Wednesday as investors shunned riskier assets, doubting that any new measures to tackle the euro zone debt crisis would emerge from a European leaders summit. Concerns the latest EU summit could be a failure sent the euro to a 21-month low, put an end to a rally in European equities, and sent yields on Spanish and Italian bonds higher. But investors bid strongly at an auction of safe-haven two-year German government bonds resulting in a yield of just 0.07 percent, while the dollar, measured against other major currencies .DXY hit a high not seen since September 2010. The leaders are expected to discuss boosting growth at their meeting later on Wednesday and the idea of a joint euro zone bond. ...

(Reuters) - The euro slumped 1 percent against the U.S. dollar on Tuesday, ahead of an informal meeting of European leaders, on growing fears of a Greek exit from the euro zone. Dow Jones quoted former Greek prime minister Lucas Papademos as saying that Greeks had no choice but to stick with a painful austerity program or face a damaging exit from the euro zone, a risk he said was unlikely to materialize but that was real. He also told the news agency that some European states and institutions were considering contingency plans for any eventuality. "Sentiment is heavily against the euro," said Joseph Trevisani, chief market strategist at Worldwide Markets, Woodcliff Lake in New Jersey. "Any negative comment from former or current Greek officials sends the euro plummeting. There were ...

Central Banks' to the Rescue? The Bank of England stole the headlines this morning as it delivered its second Inflation Report of the year. Its message was fairly grim: the UK won't regain its 2007 level of output until 2018. The biggest threat to the UK economy right now according to the bank is the impasse in the Eurozone (something the BOE can't control). The BOE: "blame the Royal Family and the Eurozone" However, the one thing it can control is QE and interest rates, and it kept the door to more QE firmly open today. It noted that Q1 GDP figures could be revised higher, however a number of "one off" factors like the Queen's Jubilee bank holiday this year could knock 0.5% from GDP. This "holiday" could have a more damaging economic effect than the Royal Wedding, according to the Bank. ...

(Reuters) - The euro fell against the dollar on Friday after weak euro zone services data and before weekend elections in France and Greece, though falls were limited ahead of U.S. jobs data later in the day. Lower-than-forecast jobs creation in the United States could reignite talk of more Federal Reserve monetary easing, which would weigh on the dollar. Figures due at 8.30 a.m. EDT are expected to show 170,000 jobs were added in April. However, after weak private payrolls data earlier this week investors see a risk of a lower number. "A non-farm payrolls number between 50,000 and 150,000 would make the market speculate about further QE which could weigh marginally on the dollar," said Carl Hammer, chief currency strategist at SEB in Stockholm. But any gains for the euro were likely ...

Fundamental Analysis EUR "Inflation biting into the economy is quite damaging" - Marco Valli, chief euro zone economist at Unicredit Euro zone consumer prices rose in February, piling pressure on the ECB after it refrained from raising interest rates this month. The inflation rate rose 2.7 per cent from the same period last year, said the European Statistical Office (Eurostat) on Wednesday. USD "A widening of the balance just tells you about the relative growth rate of the U.S. compared with other economies" - Jeremy Lawson, a senior U.S. economist at BNP Paribas Import prices rose in February led by higher petroleum costs, while food prices posted their largest decrease in three years. Overall import prices advanced 0.4 per cent. GBP The "labor-market figures paint a generally weak ...

(Reuters) - Energy prices drove up the cost of living in the euro zone in February, likely to drag on a still-stagnant economy and dampening any sense of relief that Europe's debt crisis is easing. Energy costs were 9.5 percent higher in February than the same month a year ago, breaking a fall in euro zone inflation and pushing consumer prices up to 2.7 percent in the month, the European Union's statistics office Eurostat said on Wednesday. While inflation is below last year's peak of 3 percent, economists and the European Central Bank had expected prices to fall steadily in 2012 as the euro zone slips into recession. Lower prices could have given some relief to households at a time of rising unemployment and sharp spending cuts. Industrial output data, also published on Wednesday, ...

Fundamental Analysis EUR "The salvation of the country, remaining in the euro, means great sacrifices" - Evangelos Venizelos, Greek finance minister Greece’s government is preparing a final version of an agreement on budget and structural measures required for a 130 billion euro bailout, said a Greek government official. USD "Markets would love to see some certainty, and we don't have any of that at the moment" - Frank Lesh, a futures analyst and broker at FuturePath Trading LLC U.S. stocks rose on Tuesday as investors awaited the outcome of discussion on a financial aid package for Greece. GBP "After a stronger-than-expected December, these latest figures are rather sobering" - Helen Dickinson, head of retail at KPMG U.K. retail sector contracted in January as shoppers limited their ...

(Reuters) - The euro hit an eight-week high against the dollar on Tuesday, helping lift stocks and commodities on signs a Greek bailout agreement was near, but the rally paused after a key meeting on Greece was postponed by a day. The euro rallied after Greece appeared to be close to terms on a 130-billion-euro bailout. A government official said Athens was drafting a list of painful reforms to clinch a new financial package, moving it a step closer to a deal that is needed to avoid a chaotic debt default. But a meeting of Greek political leaders was postponed until Wednesday because a draft of the bailout's terms was still not available, a party official said. The euro at one point jumped more than 1 percent to a session high of $1.3270, hitting its highest level since December 12. ...