Saturday

17th Apr 2021

World markets plunge amid worsening euro-crisis

  • Markets are not convinced Europe can cope with the debt crisis (Photo: Ahmad Nawawi)

Stock markets plunged on Thursday (4 August) to levels last seen in 2008 at the height of the financial crisis, amid worsening concerns about the US economy and Europe's capacity to overcome their debt problems.

Wall Street recorded its worst day since December 2008, with the Dow Jones index closing down by 4.3 percent. Markets in London, Frankfurt and Milan fell by 3 to 5 percent.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The drops came after the European Central Bank started buying government bonds from Portugal and Ireland.

The move did little to allay fears that the debt crisis could engulf the core eurozone, however.

German chancellor Angela Merkel, French President Nicolas Sarkozy and Spanish Prime Minister Jose Luis Rodriguez Zapatero have also announced a snap teleconference on Friday.

Italy and Spain's bond yields passed the six-percent threshold this week, meaning that their debt is considered unsustainable in the long run. Madrid on Thursday decided to suspend a bond sale planned for 18 August, even though it claimed this has nothing to do with current market turbulence.

EU monetary affairs commissioner Olli Rehn is set to speak to journalists on Friday "on current developments in the eurozone." Both his superior, commission chief Jose Manuel Barroso, and the ECB have warned that governments and the European Parliament are moving too slow to stem the crisis after a deal struck in July allowing the eurozone's bailout fund (EFSF) to do more to pre-empt contagion.

In a letter sent to eurozone leaders, Barroso said the measures agreed on 21 July "are not having their intended effect on the markets" and urged a "rapid reassessment" of the EFSF.

Neither the German chancellor nor the Dutch finance minister thanked him for the letter, saying it is unnecessary to re-open the discussion on topping up the bailout fund.

The size of the mechanism - €440 billion - is deemed insufficient if it Italy or Spain need help.

The ECB's intervention on the bonds market on Thursday did not live up to market expectations because the purchase was limited to Portuguese and Irish bonds, not Italian or Spanish ones.

In a sign that concerns are not limited to the Mediterranean area, British regulators are now pushing UK banks to make public their exposure to troubled eurozone countries, including Belgium.

In addition, concerns are mounting in the US that Congress may after next year's elections begin to unpick the 11th hour debt ceiling deal struck last week.

European markets tumble amid fears on global growth

European markets had their biggest fall since March 2009 on Thursday amid concerns over the state of the global economy and the ability of the eurozone to deal with its debt crisis.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. EU postpones decision on labelling gas 'sustainable'
  2. MEPs call for mass surveillance ban in EU public spaces
  3. Greek and Turkish ministers trade jibes in Ankara
  4. Biden repeats opposition to Russia-Germany pipeline
  5. Navalny in danger, letter warns EU foreign ministers
  6. Lithuania keen to use Denmark's AstraZeneca vaccines
  7. Gas plants largest source of power-sector emissions
  8. Study: Higher risk of blood clots from Covid than vaccines

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. US rejects Slovenia-linked plan to break up Bosnia
  2. Ukraine urges Borrell to visit Russia front line
  3. Could US sanctions hit Russia vaccine sales to EU?
  4. Polish court pushes out critical ombudsman
  5. Political crises in Romania and Bulgaria amid third wave
  6. Von der Leyen's summer plans undisclosed, after Ukraine snub
  7. Over a million EU citizens back farm-animal cage ban
  8. Three options for West on Putin's Ukraine build-up

Join EUobserver

Support quality EU news

Join us