Wednesday, April 18, 2012

European stock markets april 18 2012

European stock markets april 18 2012 : European stock markets opened slightly lower Wednesday, as investors refrained from building exposure ahead of Thursday's Spanish bond auction. The FTSE 100 index in London opened down 0.1%, the DAX index was down 0.3% and the CAC-40 index was down 0.5%.

The IMF raised its outlook for global economic growth to 3.5% for the year, but urged stronger measures to fight Europe's debt crisis and called on many nations to support growth by slowing their near-term budget cuts. Moreover, in anticipation of the semiannual meetings of the IMF and World Bank in Washington this week, several nations pledged to send funds to the IMF to boost its financial war chest.

Three Nordic countries—Denmark, Norway and Sweden—Tuesday promised a combined $26 billion on top of Japan's $60 billion commitment. The pledges will go toward an effort by IMF Managing Director Christine Lagarde to roughly double the fund's available lending capacity, currently about $380 billion, in case of further trouble. Europe had already pledged $200 billion.

Decent demand for a Spanish bill auction helped to calm nerves and managed to marginally raise hope that Thursday's Spanish bond auctions could also be well received. "This saw investors less pessimistic about Europe and lifted risk assets all round [global markets]," said IG Markets.

But, despite the marginally positive call for European markets, IG said the big question is how much room remains for further upside for markets in the near term. "We have already seen a marked increase in volatility to start the second quarter, which normally signals that markets are at an inflection point, unsure what to do next. Don't expect that uncertainty to subside any time soon," added IG.

Indeed, worries over Spain are likely to weigh on markets in the months ahead. On Tuesday, the Bank of Spain said commercial banks have notified they need €29.08 billion ($38.17 billion) worth of extra provisions and €15.57 billion worth of core capital.

Separately, the Spanish government threatened to retaliate in response to Argentina's proposed seizure of a prized unit of Spain's flagship oil company Repsol YPF . Spain's rebuke came after Argentina proposed nationalizing its largest oil-and-gas company, YPF SA. Argentina proposed taking 51% of YPF from Spain's Repsol YPF SA at a price that is yet to be determined, leaving the Spanish company with a 6% stake.

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