Global economy hopes override Greek debt fears
Slightly better economic news from China and Germany countered concerns over Europe’s debt crisis on Tuesday, lifting European shares and the single currency, but Greek default fears and a looming debt sale by Spain held gains in check.business Updated: Jan 17, 2012 21:54 IST
Slightly better economic news from China and Germany countered concerns over Europe’s debt crisis on Tuesday, lifting European shares and the single currency, but Greek default fears and a looming debt sale by Spain held gains in check.
Standard and Poor’s late on Monday added to the euro zone’s woes by downgrading the EFSF rescue fund by one notch to AA-plus, but coming after its downgrades for nine governments last week the move was widely expected.
The latest survey of German economic sentiment, conducted by the ZEW think tank, posted its biggest ever-monthly rise in January, easing fears of a recession in Europe’s largest economy.
The German data followed earlier numbers from China showing a much-feared slowdown in the world’s second-largest economy was not as great as some had expected and still kept alive hopes for more policy easing measures from the government.
“Investors are happy to look through any longer term worries about Greek debt, and are anticipating some significant policy easing in China after the data released today to boost global activity into the spring of 2012,” Andrew Milligan, head of global strategy at Standard Life Investments, said.
The strong reading on German business sentiment, while encouraging, still indicated tough times, economists said.
But the news gave an instant boost to the euro. The euro jumped to a session high of $1.2800, roughly 1% higher on the day, and moved away from a 17-month low of $1.2624 hit last week.
European shares broke through technical resistance levels to hit fresh five-month highs after the ZEW news, to be up 1.1% at 1,037.17 points.
But behind positive economic sentiment growing worries about the prospect of a Greek debt default, which some fear could happen as soon as March when €14.5 billion of bond redemptions fall due, were never far away.