The weaker euro and a new record high for gold tells us there remains a lot of doubters about the viability of the rescue of the euro last weekend by the EC, the eurozone and the IMF.
So we had more uncertainty in global markets as promising starts to trading yesterday in Asia were mostly reversed.
Shares in Australia and Japan were higher earlier, but eased as the day wore on.
Australia finished up half a per cent.
But markets in Europe and the uS didn’t follow Asia and recovered cautiously for most of the day, finishing with gains of 1% or a bit more.
Oil was again easier, the euro likewise, and the Australian dollar was weak.
Gold was off the record pace of New York on Tuesday in Asian trading yesterday, but it was still very firm.
But that changed in trading in Europe and the uS and it hit a new intra day high of $US1,245.40 an ounce.
That was after it had traded near record levels in Asia after Tuesday’s all-time high on investor concern that international financial support for indebted European states will depress currencies.
The previous high of $US1,226.56 was set early last December.
The euro rose above $US1.27 at one stage in European trading, but retreated under that level. The Aussie dollar continued to trade around 89.20 US cents.
Spain announced big cuts in wages and other benefits for the next two years overnight.
They were promised as part of the 750 billion euro support package.
Spain’s growth figures for the March quarter were out overnight, along with the rest of Europe.
The Spanish central bank last week said by its calculations, the economy grew by 0.1% in the first quarter, ending seven quarters of negative growth. Yesterday’s figures confirmed that.
The German economy grew 0.2% in the first quarter from the December quarter, which was up a revised 0.2% as well (no growth in the first forecast.
The German economy was up 1.6% in the year to March.
But growth in the French economy slowed to just 0.1% from 0.5% on the final quarter of 2009, much worse than expected.
That lifted its debt to GDP ratio to a record 78.1%. France hasn’t had a balanced budget in 30 years.
The eurozone economy as a whole grew only 0.2 percent in the first quarter compared to the last quarter of last year. Italy grew by a ‘strong 0.5%.
Greece received its first injection of an IMF bailout after revealing its economy contracted by 0.8% in the first quarter, the same as in the December quarter.
Overall, European growth was 0.2% in the March quarter, up from the flat report for the December three months.
By contrast the US economy grew 0.8%.
Europe is being left behind in this recovery and the cutbacks in spending in Greece and now Spain, will be followed by reductions in Germany, the UK and Portugal.
The new coalition government in Britain cheered The City, but markets within the eurozone were mixed as traders evaluated the effects of austerity measures and Europe’s new trillion-dollar emergency fund.
Spain had introduced a 50-billion-euro austerity package in January, but this wasn’t enough given the outbreak of fear that followed Greece’s near collapse last week.
So Socialist government was forced to take new steps, including scrapping a 2,500-euro pay out to parents for the birth of children and the 5% wage cut for public servants this year and a wage freeze next year, a move that upset trade unions.
The savings, an extra 15 billion euros over two years and a faster cut in the country’s deficit, from 11.2% of GDP last year to just over 6% in 2011.
