Monday, July 11, 2011

EU debt crisis drags stocks, oil down

Source: Press TV

European stock markets have fallen sharply due to investors' concerns that Europe's debt crisis is spreading to larger countries like Italy and Spain.

The indices have fallen about four percent in Italy, and Spain's indices tumbled about three percent, AFP reported on Monday.

In addition, Germany's stocks plunged about eight percent, British shares slumped more than seven percent, and the French market retreated about six percent.

The price of debt bonds issued by Italy and Spain also fell further, which automatically pushed up the indicated yield of the fixed interest attached to the instruments in the two countries, a sign that investors are becoming less willing to hold the debt of these countries.

Investors believe some of the financial institutions of Italy and Spain might not pass a stress test for European banks.

The European Banking Authority announced on Friday that it would publish the results of its health check of 91 banks on July 15, along with measures to bolster capital for those that failed.

Europe's gloomy economic news has even affected Wall Street, where shares dived about two percent on Monday.

The European debt crisis also pushed oil lower on Monday, as benchmark West Texas Intermediate crude fell $1.05 to settle at $95.15 per barrel on the New York Mercantile Exchange, and Brent crude plummeted $1.09 to settle at $117.24 per barrel on the ICE Futures exchange in London.

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