Stocks waver, euro spikes on EU rescue deal uncertainty

London (AFP) – Europe’s stock markets wavered Monday but the euro hit a four-month dollar peak as EU leaders struggled to pin down a 750-billion-euro ($860-billion) coronavirus rescue package for the battered region.

Frankfurt equities added 0.5 percent and Paris edged higher. Outside the eurozone, London lost 0.4 percent.

On Wall Street, the Dow opened flat after a mixed session earlier in Asia.

Sentiment was also dented as a spike in new COVID-19 infections forced fresh containment measures — notably in Australia, Hong Kong and the United States — and fuelled fears about the stuttering economic recovery.

EU leaders resumed talks to resolve their deadlock on a huge coronavirus rescue package back on track after a furious row about grants for member states threatened to derail it.

The talks by the 27 followed three days and nights of prolonged wrangling that failed to agree a plan to help drag Europe out of a painful pandemic-induced recession.

French President Emmanuel Macron and German Chancellor Angela Merkel expressed cautious hope for a deal as the talks resumed.

– ‘Heading in right direction’ –

“European equity markets are mixed as EU leaders are still divided over the terms of the 750-billion-euro rescue fund,” said CMC Markets analyst David Madden.

“Traders shrugged off the fact that things appear to be heading in the right direction as the gulf between the two sides has narrowed.”

Nevertheless, the euro was boosted by hopes of a deal breakthrough, moving to $1.1468 — the highest level since March 9 — before pulling back.

“No agreement has been reached so far — but the unusual extension of the discussions into Monday indicates a willingness by the two opposing camps to reach a consensus which, if grasped, could help create a more optimistic outlook for the euro,” said ActivTrades analyst Ricardo Evangelista.

Meanwhile, as the COVID-19 pandemic shows little sign of abating, the rally that has characterised equity markets since hitting a March low is showing signs of stalling.

The spikes — Hong Kong saw a record rise Sunday, while Florida’s has been described as “out of control” — have led leaders to unveil new measures to curb the disease’s spread, including closing bars and restaurants and making masks compulsory.

Investors are keeping an eye on Washington, hoping lawmakers will press ahead with fresh stimulus measures for the world’s top economy.

Oil prices slid lower as Chevron said it had agreed to buy US exploration and production company Noble Energy for $5 billion, the biggest petroleum acquisition since the industry downturn caused by the coronavirus.

“This is likely the first of many deals to be done as US energy companies will need to consolidate even further,” said analyst Edward Moya at online currency trading platform Oanda.

The plunge in oil prices due to lower demand thanks to coronavirus lockdowns has made much oil production unprofitable.

“Many of the smaller companies can’t survive in this environment and the incentive to make a deal will grow,” said Moya.

– Key figures around 1330 GMT –

London – FTSE 100: DOWN 0.4 percent at 6,267.81 points

Frankfurt – DAX 30: UP 0.5 percent at 12,984.91

Paris – CAC 40: UP less than 0.1 percent at 5,074.18

EURO STOXX 50: UP 0.3 percent at 3,376.39

New York – Dow: FLAT at 26,6674.21

Tokyo – Nikkei 225: UP 0.1 percent at 22,717.48 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 25,057.99 (close)

Shanghai – Composite: UP 3.1 percent at 3,314.15 (close)

Euro/dollar: DOWN at $1.1425 from $1.1428 at 2100 GMT

Dollar/yen: UP at 107.10 yen from 107.02 yen

Pound/dollar: UP at $1.2640 from $1.2568

Euro/pound: DOWN at 90.40 pence from 90.93

West Texas Intermediate: DOWN 0.7 percent at $40.31 per barrel

Brent North Sea crude: DOWN 0.7 percent at $42.83 per barrel

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