14, February 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

European stocks rose as Barclays jumped and mainly due to the upcoming meeting of G-20

European stock markets ended mostly higher yesterday, with Barclays PLC shares rallying after a positively-received earnings report and Spanish stocks gaining ground after encouraging comments from European Central Bank President Mario Draghi.

The Stoxx Europe 600 index rose 0.5% to close at 287.07, rebounding from a 0.6% loss on Monday.

“We won’t see too many moves in the run-up to the next big international event, the G-20 meeting on Friday. People don’t want to do too much ahead of that and want to see what they say about currency depreciation,” said John Redwood, chief of the investment committee at Evercore Pan-Asset.

In the recent months, market spectators have been worried that the currency war would spook financial markets, as central banks have moved to aggressively ease monetary policy, ultimately putting pressure on their national currencies.

Among European market actors, shares of Finmeccanica SpA, Italy’s biggest defense and aerospace group, sank 7.3% in Milan, after Chief Executive Giuseppe Orsi was reportedly arrested as a part of a corruption investigation. Italian authorities banned short selling of Finmeccanica shares for Tuesday and Wednesday due to strong price swings.

On a more upbeat note, shares of Barclays in Great Britain jumped 8.6% as the bank said it would slash at least 3,700 jobs over the next three years to cut costs by 1.7 billion pounds ($2.66 billion).

For the European stock markets, investors had only a light data calendar from which to draw inspiration.
Attention instead fell on comments by European Central Bank President Mario Draghi in Madrid. In a news conference after a closed-door meeting with Spanish lawmakers, Draghi said Spain was on the right track toward recovery.

The remarks helped send the IBEX 35 index 1.9% higher to 8,234.70.

Meanwhile, European finance ministers also met in Brussels.
On Monday, the issue of currency wars was a hot topic. France reportedly called to discuss ways to control the strengthening euro, while other ministers argued that the shared currency’s exchange rate should be determined by market forces.

On the same subject, finance ministers and central bank governors of the Group of Seven on Tuesday issued a joint statement, saying that the members would not manage exchange rates. Confusion prevailed over G-7 position on yen.