World stocks fell, the euro wavered and French borrowing rates rose on Monday on renewed uncertainties for eurozone debt policy after voters in Greece and France turned against austerity.
Adding to the bearish atmosphere was weak jobs data from the United States at the end of last week, which had fuelled concerns about recovery in the US economy and pushed Wall Street shares down sharply.
The Paris stock exchange’s CAC 40 index fell 1.52 per cent, amid concerns that European Union voters are hardening their opposition to deficit-cutting austerity programmes but later recovered to a 1.17 per cent.
Stocks in Athens plunged 8.3 per cent after Greece’s mainstream parties fell short of a governing majority, putting hard won agreements to save the country’s economy and membership of the eurozone back into question.
In Frankfurt the DAX 30 slid 1.35 per cent while Madrid’s IBEX 35 index lost 0.99 per cent and Milan fell 0.57 per cent. London’s exchange was closed for a holiday.
In Asia, stocks led the trend with Tokyo diving 2.78 per cent and Hong Kong down 2.61 per cent.
The euro fell to $1.2954, the lowest level since late January, but then rallied to $1.3006 at 0900 GMT, still below $1.3082 in New York late on Friday.
The interest rate on France’s benchmark 10-year bonds rose and the difference between interest rates on French and German debt, a critical measure of tension in the eurozone, widened slightly.
There was no panic but the rising yield came amid concerns that Hollande’s victory, only the second by a Socialist since the Fifth Republic was formed in 1958, could trigger a run on French debt and derail Paris’ deficit-cutting plan.
After opening down slightly on the Paris secondary market, yields recovered to Friday’s closing rate of 2.809 per cent at around 0900 GMT.
The spread between French and German bonds widened, as the German bund fell to historic low levels, suggesting a flight to safety by investors from at risk European markets to Berlin’s economic powerhouse. (AFP)