Euro Slumps on Gulf Between Fed and European Central Bank Policy

Andrew Poole

01:57 | Monday, Nov 09, 2015

Markets, however, trimmed gains in afternoon action after Federal Reserve Chairwoman Janet Yellen said it may be appropriate to raise interest rates (http://blogs.marketwatch.com/capitolreport/2015/11/04/live-video-and-updates-of-janet-yellens-testimony-before-house-committee/) in the USA next month.

The Stoxx Europe 600 index is up 0.92% on the day, which would mark an 11-week high if it remains above 0.9%. The comments reflect the message from the ECB's October 22 meeting, when Draghi expressed concern over the low inflation levels in the eurozone.

European Central Bank President Draghi said during an interview that they will see whether further stimulus is necessary and that it was too early to decide in favour of lowering the deposit rate further below zero.

He added that even if easing does come to an end, the European Central Bank would still have "many tools" at its disposal.

"After the Draghi comments, you are seeing investors getting on board", said Nick Lawson, a managing director at Deutsche Bank, though he cautioned that an underwhelming earnings season and a still-sluggish macroeconomic backdrop remained a concern.

Draghi also speaks on Thursday in Milan.

Frankfurt's DAX index underperformed peers, dragged down by an 8% fall in Volkswagen shares.

The common currency has slumped 3% against the dollar in... Separately, Reuters reported that the company is recalling cars in the US and Canada because of a camshaft issue. Brent crude dipped 0.3 percent to $50.38 a barrel after surging 3.6 percent. The programme is set to run until September 2016, but the bank has said it is ready to extend it beyond that if needed or until inflation returns to its aim.

Unemployment rate dropped to 10.8% in Euro zone.

Athens' ATG index rose 1.2 percent, lifted by gains of around 20 percent in Alpha Bank and Eurobank, while Piraeus Bank and National Bank of Greece were up more than 5 percent.

China's slowdown won't have a major impact on the euro-area economy unless it sparks a global economic downturn, according to the European Central Bank.

Mixed data in the Eurozone On the economic data front, figures released by Destatis showed German factory orders unexpectedly fell in September, by 1.7% month-on-month versus expectations for 1% growth.

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