MARKETS rose yesterday as Chinese Premier Wen Jiabao suggested the country will invest in the Eurozone bailout fund – but fell later when Eurogroup leader Jean Claude Juncker cast doubt on the success of Greek debt talks.
Wen (pictured) said the country supports efforts to stabilise the currency, and could invest some of its huge foreign currency reserves in the European Stability Mechanism (ESM).
The euro rose on his comments, although he stopped short of giving any firm commitment to invest in the bailout fund which is planned to stand at €500bn by July.
Premier Wen made the comments, and stressed the importance of a Eurozone recovery to Chinese and world economic growth, after meeting German Chancellor Angela Merkel.
However, the currency dropped again, ending the day 0.9 per cent down against the dollar, after Juncker described the on-going Greek debt talks as “ultra-difficult.” The negotiations need to be complete by 20 March to prevent the country defaulting on its debts.
Juncker also said the steps taken by EU leaders on Monday to toughen rules on fiscal discipline are “largely insufficient”, potentially undermining markets’ confidence in the deal.
Positive news came as Spain and France both sold bonds at interest rates below those seen last month, and the UK issued 2029-dated index-linked bonds at negative real yields.
However, weaker figures came as car registrations dropped 0.3 per cent in January in Germany and 21 per cent in France.
“The data reflect the ongoing concerns of households towards big-ticket expenditure,” said Marion Laboure from Barclays Capital.
Meanwhile producer prices fell 0.2 per cent in the Eurozone in December, potentially opening the door to further monetary loosening by the European Central Bank next week.
