A LATE rally prevented European shares from closing at their lowest level in more than eight months yesterday and the euro continued its recent recovery from four-year lows earlier in the week despite continuing fears about a sovereign debt crisis.
Although the Iseq regained a little ground yesterday, it fell by more than 6 per cent over the week to finish just below 2,888.
London’s FTSE 100 index lost almost 4 per cent over the past five days. Although US stocks were rallying last night, the Dow Jones index had shed about 4.4 per cent over the course of the week.
“There’s a tide of negative sentiment and very little to counter that at the moment,” said Goodbody economist Deirdre Ryan.
Having receded for some time, fears around growth resurfaced as slightly weaker economic data emerged.
After rallying strongly on Thursday, the euro sustained its momentum yesterday. It rose to $1.2510 against the dollar, from the four-year low of $1.215 it hit earlier in the week. Speculation of central bank intervention in the foreign exchange markets was believed to be the driver.
According to Simon Barry, chief economist at Ulster Bank Capital Markets, the uplift may also have been partly caused by traders who had built up “short” positions on the euro deciding to taking some profit and unwind those positions.
