Euro slides despite solid French bond demand

The euro slid over one percent on Thursday due to persistent worries about the European debt crisis; that also pulled down share prices around the region.

Even though France’s first government bond auction of the year saw solid demand from investors and its borrowing costs rose only slightly, that was not enough to calm worries about euro zone countries’ abilities to fund their massive debts this year.

Paris sold eight billion euros worth of bonds maturing in 10 to 30 years time.

The strong demand, despite concerns France could lose its triple-A credit rating, could help dispel some fears about the ability of governments to fund their massive debts.

A sterner test will come next week, when Spain and Italy the two big economies seen as most at risk from the crisis are due to issue bonds.

Around Europe, banks were the biggest losers and Milan took a hammering — down 3.5 percent — on fears that some of them will have to follow UniCredit’s lead and offer deep discounts on share prices as they sell more to raise additional capital.

UniCredit’s shares fell 17 percent following Wednesday’s 14.5 percent slump.

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