Euro declines on Greek and French election results

The euro lost ground on the pound and the dollar on Monday after weekend election results that cast doubt on austerity plans across Europe, reports the BBC.

Francois Hollande, who won the French presidency, vowed to focus more on growth, while Greece’s pro-bailout parties performed poorly. The euro dropped as low as $1.295, the lowest it has been since January, later rebounding to $1.305. In addition, it fell to three-year lows versus the pound.

The main stock markets in Europe fell early during trading before recovering. The Dax in Germany dropped by over two per cent, but ended up closing having increased by 0.1 per cent. The Cac 40 in Paris recovered to trade at 1.65 per cent up.

Shares in Athens fell by up to 8.3 per cent, while the markets in London were closed for the UK bank holiday. Elsewhere, the Dow Jones in New York opened at 0.3 per cent down.

There was a rise in interest rates on some government debt, indicating a decline in investor confidence. The secondary markets’ yield for Greek 10-year bonds has increased from 20 per cent to 22.2 per cent. In Asia, markets also dropped, with Tokyo’s Nikkei falling 2.8 per cent, Hong Kong’s Seng declining by 2.4 per cent and South Korea’s Kospi dropping 1.8 per cent.