World shares tumbled and the euro came under renewed pressure today in what is shaping up to be a major flight to safety on fears of contagion from the Greek debt crisis.
Wall Street shares fell, following signs of soft US sales and disappointment the European Central Bank offered no new measures to ward off the region's sovereign debt troubles. Investors sold corporate debt on worries the euro zone crisis would hurt US growth.
The euro tumbled to a 14-month low of 1.2692 against the dollar, and was recently trading down 0.58 per cent at $1.2738.
European policymakers have warned the euro's survival depends on a life-support package for Greece agreed last weekend. This has ratcheted up risk aversion and boosted safe-haven demand for the dollar, pushing it to a one-year high versus a basket of major currencies.
"The bull market always had to end somewhere and it looks like this could be the trigger," said Ben Potter, analyst at IG Markets.
"There's no let-up in concerns that the euro zone debt crisis could continue to worsen and as a result equity markets across the globe remain under pressure," MSCI's all-country world stock index tumbled 1.7 per cent, to its lowest since March 1st.
In Dublin, the Iseq index of shares fell more than 80 points or 2.5 per cent. In the United States, the Dow Jones industrial average declined by 98.78 points or 0.9 per cent, to 10,769.34.
Europe's FTSEurofirst 300 index sank 1.41 per cent to 1,008.93, with its fall softened as BNP Paribas beat expectations on first-quarter profit.
The French bank’s chief executive called scenarios for contagion of Greece's crisis "unfounded" even as the French bank revealed a €5 billion euro exposure to the country.
Japan's Nikkei slumped 3.3 per cent overnight, catching up with other bourses after a three-day holiday.
Focus was on the European Central Bank, which had been expected to offer extra measures to ease a debt crisis that sparked deadly riots in Athens yesterday and is now piling pressure on Spain, Portugal and others.
Peter Cardillo, chief market economist at Avalon Partners in New York said the ECB's decision to keep monetary policy unchanged was not surprising but "with the euro collapsing, investors wanted to see some sort of a defensive movement."
Ten-year euro zone government debt yields declined 0.04 percentage point to 2.83 per cent, and benchmark US Treasury note yields fell to 3.54 per cent from 3.55 per cent.
Reuters