Euro at three-year high on ECB taper and German coalition deal

THE dollar slumped to a more than three-year low against the euro yesterday, as the common currency extended its gains on hopes that European Central Bank (ECB) policymakers are preparing to reduce, or taper, their vast monetary stimulus programme.

The euro was up 0.9pc to $1.2139. MSCI’s broadest gauge of world stock markets hit a fresh all-time high.

The euro also found further support after German Chancellor Angela Merkel struck a deal with Social Democrat (SPD) rivals yesterday to open government coalition talks, easing months of uncertainty that has undermined Germany’s global role and raised questions about her political future. Sterling also gained.

Meanwhile, record high world stocks headed for an eighth straight week of gains yesterday.

Irish shares lagged for much of the session, Blackrock raised its Bank of Ireland stock sightly to just over 5pc.

Germany’s DAX gained as much as 0.3pc with most of Europe following suit but the strength of the euro, which was almost matched by Britain’s pound and the Swiss franc, eventually dragged them back to almost flat on the day.

The rising tide failed to lift all boats, however.

British building and services company Carillion plunged another 30pc yesterday after Sky said the company had lined up EY to help manage the business if it failed to strike a deal with creditors.

Sky did not say where it obtained the information. Carillion and EY declined to comment.