Continuing uncertainty over the future of Greece and soaring interest rates on Italian bonds weighed on European markets today, although Wall Street recovered from an earlier slump to end the day in positive territory.
Frankfurt’s DAX and Paris’ CAC 40 both closed down 0.6 percent, followed by London’s FTSE 100, which sank 0.3 percent. The only market on the upswing was the FTSE MIB in Milan, which rose 1.3 percent despite bond rates hitting highs above 6.6 percent — a level not seen since Italy adopted the euro.
The day’s biggest gainers included Arcandor, which rose 6.6 percent, and Safilo Group, which was up 1 percent. Carrefour slipped 2.6 percent as Metro fell 2.3 percent.
Investor sentiment began to turn after the European close and the S&P Retail Index rose 0.8 percent, or 4.24 points, to 543.17 as the Dow Jones Industrial Average regained the 12,000 mark, increasing 0.7 percent, or 85.15 points, to 12,068.39. Retail gainers included Macy’s Inc., up 3.2 percent to $32.35; Target Corp., 1.3 percent to $52.83, and Gap Inc., 1.3 percent to $19.90.
Today, Greece formed a new coalition government that will attempt to chart a path through the debt crisis and Italy became the center of attention once again.
Prime Minister Silvio Berlusconi, who refused a low-interest loan from the International Monetary Fund last week, denied he was set to resign and insists Italy is thriving, despite its rising interest rates on borrowing.
Investors are worried Italy might become the next major victim of the sovereign debt crisis that is spreading through the region.