Europe Stocks Seen Sharply Lower on Debt Fears
European markets are expected to open sharply lower amid fears the debt crisis is spreading to Italy, the euro zone’s third-largest economy.
The FTSE is expected to open 53 points lower, Germany’s DAX is predicted to be down by 74 points and the CAC 40 in France is called 44 points lower.
Italian 10-year yields hit a record high in Monday’s session as money poured out of the euro and stocks across the world.
Asian stocks were trading sharply lower Tuesday.
Overnight, euro zone finance ministers pledged new help for Greece promising to be more flexible on handing out rescue funds while committing to agree by the end of the month on cheaper loans with longer maturities.
In a sign of how difficult the euro zone is finding it to get ahead of its fiscal problems, Greece’s Prime Minister, George Papandreou wrote in a letter to the president of the euro group that markets increasingly doubt the euro zone’s ability to deal with the debt crisis.
In an editorial in Tuesday’s Financial Times, George Soros added to the gloom around Greece by saying that default may now be inevitable while calling for European Union leaders to adopt a plan B and stop contagion to the rest of the euro zone.
Alcoa kicked off the second quarter earnings season in the US with profits that met expectations but the aluminum giant's shares fell slightly in after hours trade.
ArcelorMittal will be in focus on European trade following its $5 billion bid for Australian coal producer Macarthur, a bid it is mounting with Peabody Energy .