Broadgate: Market News 14/5
14 May 2012
Greece’s political deadlock looked set to continue for a second week as President Karolos Papoulias failed to secure agreement on a unity government. The euro weakened for the tenth time in eleven days, dropping to a three-month low on concern that Greece would exit the single European currency and after German Chancellor Angela Merkel’s party lost a state election.
The debate between growth and austerity will form the centerpiece of talks tomorrow between the newly installed French President Francois Hollande and Germany’s Merkel. Euro finance ministers meet today and may discuss the international bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up the country’s banks.
Asian stocks swung between gains and losses as speculation heightened that Greece may exit from the single European currency, countering China’s efforts to shore up economic growth by cutting the level of cash banks must set aside as reserves. The People’s Bank of China said May 12 that it is cutting the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in economic growth is deepening.
The so-called Aussie, the world’s fifth-most traded currency, remained lower against the yen after completing a three-week drop amid a worldwide slump in shares.
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