European investors were decidedly underwhelmed by the appearance of the European Stability Mechanism, with the indices of all bourses losing value of around one percentage point.
The euro too slipped back from its two-week high-point on Friday, trading against the US currency at under one dollar 30.
“It’s been a difficult birth but the ESM is finally here,” said Robert Halver, a trader with Baader Bank in Frankfurt. “Now Spain could ask for aid. The banks definitely need money because without the support of banks, the real estate market can not be reformed. Prices have to fall, which means write-offs for banks. To achieve that, they need new capital and that’s coming from the ESM.”
The debt problems facing Greece and Spain have been back in the spotlight. Germany’s Chancellor Angela Merkel heads to Athens this week, and Spain’s prime minister will take part in talks in Paris.
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