(MENAFN- Gulf Times)
European stock markets ended the week down as the euro extended its gains yesterday after the European Central Bank said it would reassess its monetary policy stance in the autumn, fuelling talk that the age of cheap money was coming to an end.
Eurozone markets slumped more the 1.5% while London slipped 0.47%, also dragged lower by a weaker trading on Wall Street following mixed corporate earnings reports there, and as investors took profit after a healthy week.
In addition, traders were spooked by reports that the prosecutor probing US President Donald Trump's links to Russia will also investigate his business dealings.
London's FTSE 100 was 0.47% down at 7,452.91 points, Frankfurt's DAX 30 slid 1.66% at 12,240.06 points, Paris' CAC 40 shed 1.57% at 5,117.66 points and the EURO STOXX 50 dropped 1.37% at 3,451.71 points at close.
ECB chief Mario Draghi 'diverted the attention away from the appreciating single currency at his press conference. The market interpreted this as a sign that Draghi and his ECB colleagues are not too concerned about the impact of the euro on eurozone exports.
Draghi on Thursday tried to play down talk the bank is preparing to wind down its euro;60bn ($69bn) a month asset-buying scheme saying inflation remained tepid.
However, he added: 'We simply said that our discussions should take place in the fall, or in autumn, since we are in Europe.
While Draghi tried to remain guarded, traders took that to mean the bank would soon announce a 'tapering.
'The euro resumed its rally even though... Draghi said that discussions on tapering were pushed back to after summer, said LCG analyst Ipek Ozakardeskaya.
'The ECB is certainly preparing to unwind its asset purchases programme starting from September, yet has no incitement to announce it before the decision date, given that the pricing happens almost instantaneously and a premature announcement would jeopardise the performance of the QE programme, the expert said.
The euro mdash; already on the march against the dollar as the eurozone economy picks up mdash; ploughed 1% higher on Thursday to near two-year highs and yesterday pushed on to $1.1659.
Bloomberg News said Robert Mueller, the special prosecutor looking into allegations Trump's campaign worked with Moscow to sway the presidential election, would look into past transactions involving the tycoon's firms and Russians in the past.
'Just last week President Trump said expanding the investigation beyond Russia would be out of bounds, so with Mueller broadening the inquisition into Trump's business dealings US political risk could move to a whole new level as this foxtrot plays out, said Stephen Innes, senior trader at OANDA.
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