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TEHRAN, November 26 -European stocks, Italian bonds and the euro rallied on Monday on signs that Rome was preparing to rework the spending plans that have left it facing formal European Union disciplinary action.
TEHRAN, Young Journalists Club (YJC) -European stocks, Italian bonds and the euro rallied on Monday on signs that Rome was preparing to rework the spending plans that have left it facing formal European Union disciplinary action.
Deputy Prime Minister Matteo Salvini had hinted on Sunday at the possibility of tweaking the country’s budget deficit goal, saying “no one is stuck” to the 2.4 percent target and the signs of a shift continued on Monday.
Italy’s banks index .FTIT8300 duly leapt 5.3 percent which put it on track for its strongest day since June [.EU], while shorter-term Italian borrowing costs fell sharply in the bond markets to their lowest since September. [GVD/EUR]
“It will help the banks if the BTP-Bund spread goes lower which it has been this morning,” Pierre Bose, head of European strategy at Credit Suisse Wealth Management, said.
“You potentially move from a negative spiral to a more positive spiral where you end up with less pressure on the banks, more ability to lend and that will underpin growth in a better fashion.”
The euro also climbed, rising 0.3 percent to $1.1376 EUR= and was up 0.7 percent at 128.90 yen EURJPY=EBS, though it flinched briefly when Germany's monthly Ifo survey showed a larger-than-expected drop in business morale.
“The (Ifo) index’s fall is somewhat alarming,” Uwe Burkert of LBBW wrote in a note. “It was generally expected that the economic weakness of the third quarter would be corrected with a firmly positive growth figure in the fourth quarter.”
There was also a rise for the pound GBP= against the dollar after the United Kingdom and European Union reached an agreement over the UK's Brexit plans on Sunday.
It dipped against the euro, though EURGBP=, and analysts remain cautious that the Brexit deal faces stiff opposition from within the UK parliament which will vote on the agreement in around two weeks’ time. [GBP/]
UK Prime Minister Theresa May will hold an emergency cabinet meeting on Monday to brief ministers on her strategy to convince the deal’s critics that include the Northern Irish DUP party currently propping up May’s government.
“The failure of the pound to rally on recent positive developments suggest the market is pricing in that the deal won’t pass the first time in parliament,” said Lee Hardman, a currency analyst at MUFG.
“During the next two weeks the pound will likely trade with increased volatility,” he added.
Source: Reuters
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