European stocks fall, bonds rise

london — European stocks slipped and safe haven government bonds were in demand early on Monday as the collapse of coalition talks in Germany served as a reminder of political risk that still runs as an undercurrent in Europe.

German stocks led the move downward, with the country’s main index down by over 0.2 per cent, pulling the main panEuropean broader Euro STOXX 600 index lower by a similar amount.

Investors instead preferred safe haven government bonds: the yield on Germany’s 10-year government bond, the benchmark for the bloc, edged lower to a 1-1/2 week low of 0.35 per cent at one stage.

Other analysts said however, that the overall sentiment towards the eurozone remains positive, reflected in the resilience of the euro on Monday.

And so the euro, which had dipped to as low as $1.1722 at one stage, was back up on the day by 0900 GMT, resuming a more than two per cent recovery against the dollar over the past two weeks. Against the yen, the single currency dipped as much as 0.8 per cent in Asian trading to a twomonth low of ¥131.16. But it was flat in London trade at ¥131.97, down just 0.2 per cent on the day.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was off its session lows to be slightly down, as volatile Chinese shares reversed earlier sharp losses. Japan’s Nikkei stock average finished down 0.6 per cent. — Reuters