ROME: Eurozone stocks have tumbled on fears of an early end to the ECB’s QE stimulus program and a spike in tensions over the Greek crisis.
Frankfurt’s DAX 30 index tumbled 2.5 per cent to 11,328 points, while the CAC 40 in Paris fell 2.2 per cent to 4,974 points.
Madrid fell 2.7 per cent and Milan by 2.8 per cent.
Meanwhile, London’s benchmark FTSE 100 index shed 0.8 per cent at 6,928 points, with less than 48 hours to go until Britons head to the polls on Thursday.
Having failed to sustain early higher prices, European stocks erased all of Monday’s gains on Tuesday as a spike in the euro and European bond yields unnerved a stock market rally that has been built on both being lower,” analyst Jasper Lawler at CMC Market UK said.
The euro fell from $US1.1146 late in New York on Monday in early European trading, dropping below $US1.11, but then rebounded and was trading at $US1.1177 at 1600 GMT.
With inflation in Europe rising alongside the price of crude oil, as well as service and manufacturing picking up, there is an increasing threat that the European Central Bank will finish its quantitative easing program early,” Mr Lawler said.
The ECB launched a bond buying program, or quantitative easing (QE) program, in March to avert the risk of dangerous deflation and kick-start growth in the eurozone. It is supposed to last through September 2016.
But with prices now rising again in the eurozone, and a rebound in oil prices ensuring they will likely continue to do so, investors see a possibility for the ECB to let up on the stimulus, which has weakened the euro.
Yields on eurozone government bonds have also jumped in the past week on expectations that the ECB may cut its purchases.
