Milan

Milan, other European markets drop

Spread between Italian, German bonds widens to 285 basis points

Milan, other European markets drop

Milan, June 10 - Investors continued to pull out of European stock markets Tuesday, driving down value across the continent and pulling Milan's leading financial market lower. The FTSE Mib fell by 1.62%, dropping to 16,286 points as investors fretted over a range of concerns, from poor economic growth to the outlook for European Central Bank policy interest rates. Even a German court hearing that began Tuesday into the ECB's new assistance plan, the Outright Monetary Transactions program, worried investors. In Milan, major industrial stocks on Italy's leading stock exchange were hit hard, including Finmeccanica, which dropped by 3.8%, Mediaset, down 3.94%, and Fonsai, down 3%. Banks were also undermined by concerns over the outlook for interest rates: Intesa Sanpaolo shares lost 2.87% Banco Popolare lost 2.94%, and Unicredit fell by 1.25%. The spread between Italy's 10-year bond and its German counterpart widened by as much as 285 basis points during trading Tuesday before closing at 277, above Monday's close of 269 basis points. The yield on Italian 10-year paper closed at 4.36%. The spread between lending rates in the two countries is seen as an indication of investor faith in the Italian economy and its ability to cope with a lingering recession. On other European markets, Frankfurt's DAX shed 1.00%, closing at 8,222.46 points, Paris's CAC 40 slid by 1.39%, closing at 3,810.56 points, Spain's IBEX 35 shed 1.70% to close at 8,089.30 points, and London's FTSE 100 fell by 0.94% to end trading at 6,340.08.

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