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European stock markets stabilise following ECB announcement

The ECB says it is ready to buy EU bonds, in an attempt to stem the building financial crisis, while the G7 have indicated they could intervene in foreign exchange markets.

Image: Austin Keys via Creative Commons

Updated 09.10

EUROPEAN STOCK MARKETS have stabilised this morning following the ECB announcing that it would buy EU bonds to help alleviate the growing financial crisis.

The ECB has not yet confirmed which eurozone member’s bonds it will purchase to avert a eurozone meltdown, but it is widely expected they will be Spain and Italy’s.

Spanish and Italian markets rose in early trading following the announcement this morning, and yields on both country’s bonds dropped, the BBC reports.

Meanwhile, world shares dipped on opening – despite a day of emergency meetings on Sunday between the financial heads of major world powers over the twin debt crisis in the eurozone and United States. Some markets in Asia fell by as much as six per cent, Reuters reports.

In a joint statement released last night, France and Germany said they believed reforms agreed upon last month would allow the ECB to step in to stabilise the eurozone with confidence ahead of the EFSF stability funds coming into effect later this year, the Irish Times reports.

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Meanwhile, following discussions yesterday, the G7 group of industrialised nations said that they were “ready to take action to ensure stability and liquidity in markets”, saying that they could intervene in foreign exchange markets if needed, the Financial Times reports, (free subscription required). The G7 added that “market’s trust” in US Treasuries was solid.

Read: Emergency talks held over twin debt crisis >

Read: Downgraded: US loses AAA credit rating for the first time ever >

Explainer: Why are the markets in chaos, and should you be worried ? >

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