Euro falls as concerns about European deal grow
The euro's value against the dollar fell for the third straight day and was recently below $1.30 for the first time since January. The drop plays into fears that the euro itself may not survive the current crisis.
A deal announced at the end of last week by European Union members was supposed to help prop up struggling European economies and the euro itself. This week, though, has been filled with reports from analysts and economists saying that the agreement did not do enough to stop the spread of the ongoing debt crisis to Europe's larger economies.
Italy and Spain have been the major flash points for the latest fears. Last week's agreement was supposed to provide new support for both countries so that they can go out and borrow more money from the public in order to pay off old bonds.
At a sale Wednesday morning of Italian five-year bonds, though, investors showed that they are not confident in Italy's ability to pay back investors. The yield that investors demanded at the bond sale was up significantly since the last sale in November, and the yield on benchmark 10-year Italian bonds is up for the third straight day. Investors will be watching again when Spain conducts its own bond sale Thursday.
The concerns drove down stock prices across Europe, with leading indexes finishing the day down 3.3% in France and 1.7% in Germany.
U.S. indexes were down less sharply. The Dow Jones industrial average was recently trading down 132.60 points or 1.1% to 11822.57.
-- Nathaniel Popper
Photo: Outside the headquarters of the European Central Bank. Credit: Kai Pfaffenbach / Reuters