The FTSE 100 closed down 2.35pc, the Dax in Frankfurt fell 4.04pc, and the CAC in Paris was down 3.6pc following the news that Mr Stark, the top German official at the ECB, was leaving due to "personal reasons". Sources said his departure reflected a deep rift at the heart of the ECB, with Mr Stark opposed to the bank's policy of buying eurozone bonds to support highly indebted countries like Italy and Spain. Mr Stark was considered to be a hawk at the bank, favoring looser monetary policy including higher interest rates. The news came amid clear divisions in the G7 ahead of the two-day meeting, which began on Friday. Before arriving in Marseilles, Chancellor George Osborne was adamant that he would not waver from his austerity plan. "Britain will stick to the deficit plan we've set out," he said. However, Christine Lagarde, the head of the International Monetary Fund, said that policymakers in advanced economies should use all available tools to boost growth as the world economy entered a "dangerous new phase". Speaking alongside the Chancellor at Chatham House, she said that while Britain's £110bn deficit reduction plan was "appropriate", policymakers should be "nimble." An EU official in Marseilles admitted that Mr Stark's resignation was unhelpful: "People weren't expecting this and the timing is bad," he said. Joshua Raymond, chief market strategist at City Index, took a similar line: "[Stark's departure] escalates investor fears that Europe's leaders and central bankers are far from united in ideology at a time when the markets need to see credible and definitive action to prevent the sovereign debt crisis from sending European economies back into recession." Just hours after his resignation, Mr Stark called for drastic reforms to strengthen economic governance of the euro zone. He said that a "quantum leap" is necessary "at the European level" to reinforce its institutions. He added that "a large reform of decision-making mechanisms and sanctions" is necessary in order to secure in the future effective coordination of economic and fiscal policies of the euro zone countries. "We find ourselves in a situation where risks to public budgets undermine financial stability," wrote Stark.
Access Investments-Building Awareness - European Union-ROMANIA
Saturday, September 10, 2011
The FTSE 100 closed down 2.35pc, the Dax in Frankfurt fell 4.04pc, and the CAC in Paris was down 3.6pc following the news that Mr Stark, the top German official at the ECB, was leaving due to "personal reasons". Sources said his departure reflected a deep rift at the heart of the ECB, with Mr Stark opposed to the bank's policy of buying eurozone bonds to support highly indebted countries like Italy and Spain. Mr Stark was considered to be a hawk at the bank, favoring looser monetary policy including higher interest rates. The news came amid clear divisions in the G7 ahead of the two-day meeting, which began on Friday. Before arriving in Marseilles, Chancellor George Osborne was adamant that he would not waver from his austerity plan. "Britain will stick to the deficit plan we've set out," he said. However, Christine Lagarde, the head of the International Monetary Fund, said that policymakers in advanced economies should use all available tools to boost growth as the world economy entered a "dangerous new phase". Speaking alongside the Chancellor at Chatham House, she said that while Britain's £110bn deficit reduction plan was "appropriate", policymakers should be "nimble." An EU official in Marseilles admitted that Mr Stark's resignation was unhelpful: "People weren't expecting this and the timing is bad," he said. Joshua Raymond, chief market strategist at City Index, took a similar line: "[Stark's departure] escalates investor fears that Europe's leaders and central bankers are far from united in ideology at a time when the markets need to see credible and definitive action to prevent the sovereign debt crisis from sending European economies back into recession." Just hours after his resignation, Mr Stark called for drastic reforms to strengthen economic governance of the euro zone. He said that a "quantum leap" is necessary "at the European level" to reinforce its institutions. He added that "a large reform of decision-making mechanisms and sanctions" is necessary in order to secure in the future effective coordination of economic and fiscal policies of the euro zone countries. "We find ourselves in a situation where risks to public budgets undermine financial stability," wrote Stark.
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Week’s Performance
The S&P 500 capped a sixth weekly drop in the past seven. The gauge is down more than 15 percent from an almost three-year high at the end of April, while still up more than 3 percent from its low for the year last month.
Energy, technology and financial companies were the biggest drag on the index as all 10 main industry groups dropped.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, rose 1.2 percent to the highest level since March as the currency strengthened against 15 of 16 major peers.
The Stoxx Europe 600 Index lost 2.6 percent, extending this week’s retreat to 3.7 percent. Porsche SE tumbled 14 percent after Volkswagen AG said it will no longer complete its merger with the sports-car maker by the end of the year because of pending lawsuits. Verbund AG, Austria’s biggest power company, sank 12 percent after cutting its guidance for 2011.
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