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Euro crisis hits DAX index hard

The stock market index DAX, which represents Germany's 30 biggest companies, felt the sting of Europe's economic fears on Monday, when it dropped below 6,000 points for the first time in five months.

Euro crisis hits DAX index hard
Photo: DPA

Germany’s most important market index lost 1.4 percent in the first few minutes of trading, though it had recovered slightly by midday. The last time the DAX dropped below the psychologically important 6,000-point mark was January 9.

“As well as the worries about the eurozone – especially Spain and its troubled banking sector – we now have increasing worries about the global economic situation,” said trader Markus Huber of ETX Capital. The weak employment stats released in the US last Friday have also exacerbated the situation, as has slower growth in China’s service industry.

The German government moved quickly to reassure the markets, saying the DAX drop did not represent an escalation Europe’s debt crisis.

Finance Ministry spokesman Martin Kotthaus said on Monday that the euro and the markets had continually risen and fallen since the crisis began in 2008. “Now we just have to wait and see what happens in the next days and weeks,” he added.

The European index EuroStoxx 50 recovered from the initial blow, and ended up gaining half a percent by midday.

The Local/DPA/bk

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BUDGET

Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

READ ALSO: France and Germany push for compromise on eurozone reform

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