Europe was thrust back into the spotlight today as the euro sank to an 11-month low, slipping below $1.30 and prompting investors to sell off stocks from Milan to New York.
Euro zone leaders are trying get the currency bloc on firmer footing by creating a tighter fiscal union that would help its members avoid the credit crunches that hit weaker countries such as Greece and Ireland and have threatened the much-larger Italy.
But it has been tough going. Britain nixed the plan immediately, others are growing wary and investors have now been spooked again.
The CAC 40 in Paris led the downward slide, falling 3.3 percent to 2,976.17, followed by the FTSE MIB, which tumbled 2.8 percent to 14.430.02. The DAX in Frankfurt retreated 1.7 percent to 5,675.14 while the FTSE 100 in London sank 1.1 percent to 5,366.80.
The euro sank 0.5 percent to just under $1.30 while the pound traded below $1.55.
Among the stocks hit hardest retail and luxury stocks were Asos.com, which tumbled 5.6 percent to 11.42 pounds; Burberry Group, which fell 4.3 percent to 11.39 pounds; and Carrefour, which retreated 5.3 percent to 16.61 euros. Ferragamo plummeted 6.6 percent to 10.13 euros, while Hermes and PPR fell 3.2 percent to 223.20 euros, and 105.40 euros respectively.
German chancellor Angela Merkel tried to talk up the new European Union fiscal pact in a speech to her country’s parliament. It has been widely reported in Europe that cracks are now appearing in certain countries whose parliaments have yet to pass the new, tighter fiscal measures.
“The overcoming of the debt crisis — and I cannot reiterate this enough — is a process that will not take weeks or months, but years. And it will always be accompanied by temporary failures,” Merkel told the Bundestag.
“It is important, however, to take courage from the process. If we are not discouraged by failures, and we work toward stability and fiscal union, Europe will not only master the crisis, it will emerge stronger and more stable than before,” she said.
In the U.S., the S&P Retail Index slumped 0.8 percent, or 4.30 points, to 514.99, as the Dow Jones Industrial Average fell 1.1 percent, or 135.70 points, to 11,819.24.
The decliners included, Abercrombie & Fitch Co., 3.8 percent to $46.34; Aéropostale Inc., 3.8 percent to $15.63; Dillard's Inc., 3.7 percent to $44.52; The Warnaco Group Inc., 2.5 percent to $48.53; Kohl’s Corp., 1.4 percent to $49.66, and Tiffany & Co., 1.2 percent to $64.42.
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