It was another extremely choppy Friday for Europe’s financial markets capping a torrid week’s trading.
Share indexes finished the day up having swooped in and out of the red on fears about the impact on the banking sector from a possible Greek default mixed with hopes of further measures from the European Central Bank to ease the region’s debt crisis.
Stocks seesawed between gains and losses, as investors hit the buy or sell buttons on any indications from policy-makers suggesting additional steps to support the economy.
French banks which have lent a lot of money to the Greek government recovered strongly. BNP Paribas surged 11 percent and Societe Generale 6.9 percent on rumours of a possible French government cash injection to bolster banks’ balance sheets.
But investors remain nervous, on the floor of the Frankfurt Stock Exchange Gabriele Widmann of Deka Bank said: “It’s a debt crisis, it’s a banking crisis and it’s a financial crisis so what has to happen in the future is really battling against this high debt in the European Union and it will take a long time to solve these problems.”
Escalating fears of economic recession and reduced demand at one stage dragged down prices of oil and industrial metals like copper.
Gold slumped further – to a one-month-low well below $1,700 an ounce as investors sold it to raise cash to cover their losses on other markets.