Stocks mixed, euro jumps on roll-out relief

London, Jan 2: Stocks were mixed on Wednesday, the first trading day of 2002, but the euro rose by more than one per cent against the dollar, yen and pound as euro notes and coins enjoyed a smooth roll out in the 12-nation euro zone.

Euro notes and coins were officially introduced on New Year’s day but financial markets and most high street banks and shops were closed for the holiday.

Analysts said the advent of euro notes and coins three years after it was introduced on the financial markets was being closely watched with the broader issue of a global economic slowdown taking a back seat at least for the next few days.

"There was a fairly wide market expectation that there would be some negative headlines linked to the changeover," said Michael Klawitter, senior currency strategist at WestLB in London.

"So far, everything is working relatively smoothly and so we are seeing a relief rally in the euro."

The euro hit $0.9000 versus the dollar, up 1.2 per cent and 118.30 against the yen, its best level since September 1999.

Outside the euro zone, the pound sterling was down 1.4 per cent against the single currency at around 62.00 pence against the euro. Pro-Euro officials in Britain hope that a smooth introduction of notes and coins will increase the chances of an early referendum on scrapping the pound in favour of the euro.

Stock markets remained cautious following Wall Street’s dismal performance on Monday, the last trading day of the year. The Dow Industrial Average index dropped 115 points or 1.14 per cent.

The Standard & Poor’s 500, a broad gauge of the US stockmarket, was 1.11 per cent down on Monday and ended 2001 with a loss of about 13 per cent over the year, its worst performance since 1974, when it dropped nearly 30 per cent.

European blue chips were mixed with oil shares and banks leading the downdraft but techs gained on signs the worst may be over for the battered sector.

The pan-European Eurotop 300 index eased 0.4 per cent to1,255 points, while the narrower Euro Stoxx 50 index had shed 0.25 per cent. "We are just tending to drift down, with no fundamental reason behind it," said David Thwaites, a European equity strategist at BNP Paribas.

London, Frankfurt and Milan were firmer, but Spanish shares were hit hard as the country’s two heavyweight banks, SCH and BBVA fell more than two percent. Both are exposed to Latin America where Argentina is still in deep financial trouble.

Argentina’s Congress appointed Eduardo Duhalde, a populist power broker in the Peronist Party, as the new president. Duhalde, the country’s fifth president in two weeks, must come to grips not only with a mountain of debt but also a disgruntled population, weary of the recession that has plagued Latin America’s third biggest economy for four years.

Argentina’s default on its $132 billion public debt hasrattled Financial markets and hit banking shares elsewhere in the world.

The energy sector was weakest, down two percent, weighed by falls in oil shares despite news that producer cartel Opec last week agreed to chop 1.5 million barrels from daily production.

— Reuters