- Title: Dax gains despite Renzi rebuff
- Date: 5th December 2016
- Summary: FRANKFURT, GERMANY (DECEMBER 5, 2016) (REUTERS) EXTERIOR FRANKFURT STOCK EXCHANGE EUROPEAN FLAG TRADING FLOOR VARIOUS OF TRADERS CAMERA CREW ON FLOOR ELECTRONIC BOARD SHOWING DAX CURVE (RISING STEEPLY) VARIOUS OF TRADERS ELECTRONIC BOARD SHOWING START OF TRADING WITH DAX AT 10,494.64 MORE OF TRADERS ELECTRONIC BOARD SHOWING GERMAN SHARE INDEXES (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "There are two topics here at the stock exchange: one is the presidential election in Austria - not really anymore an issue, but the other one certainly is the failed referendum in Italy. There will be new elections in spring, and a thought that plays on our minds here is whether eurosceptic parties can gain power there who will lead Italy from the euro zone." VARIOUS OF TRADERS ELECTRONIC BOARD SHOWING HIGH OF DAX AT 10,725.97 (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Despite the failed referendum (in Italy), the markets are very stable. They are crisis-tested; they have grown a tough skin. That is one thing. But even more important is that the 'SEKE', the special forces in Europe (referring to European Central Bank) will do everything in their power to appease voters until election day in Italy by an even larger national debt which will be refinanced by the ECB (European Central Bank). Because they shall put their little cross (vote) in the right place, with election gifts from the ECB." VARIOUS OF TRADERS ELECTRONIC BOARD SHOWING LOW OF DAX AT 10,493.62 (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Theoretically, we have now the possibility for a new EU and new euro crisis. But we also have the federal banks who try to get everything under control with their financial politics. And they have to do that, because we cannot solve a political problem with the money from the ECB. We have to take preventative actions." VARIOUS OF TRADERS ELECTRONIC BOARD SHOWING CHANGE IN DAX TRADERS AND TILT UP TO ELECTRONIC BOARD SHOWING DAX CURVE DAX CURVE TRADING FLOOR
- Embargoed: 20th December 2016 09:55
- Keywords: stock exchange DAX Italy
- Location: FRANKFURT, GERMANY
- City: FRANKFURT, GERMANY
- Country: Germany
- Reuters ID: LVA0015BLWXTZ
- Aspect Ratio: 16:9
- Story Text:Markets had been jolted initially by the scale of Prime Minister Matteo Renzi's defeat in the referendum about constitutional reforms in Italy and his subsequent resignation which pointed to further turbulence and political crisis in the euro zone's heavily indebted third-largest economy and particular uncertainty was focused on the country's fragile banks.
The euro briefly tumbled overnight to 20-month lows against the dollar, as markets worried that instability could reignite an EU debt crisis and deal a hammer blow to Italy's fragile banking sector, especially the troubled Banca Monte dei Paschi di Siena.
However, by early in the European morning it had largely rebounded. The euro roared back above $1.06, still down on the day, Italian stocks moved higher, and Germany's DAX rose significantly immediately after opening of the Frankfurt stock exchange, climbing as high as 10,720 points.
The referendum outcome was anticipated but the margin of Renzi's defeat - 59 percent to 41 percent - caused the initial alarm. Analysts say it could still deal a body blow to a bloc already reeling under anti-establishment anger that led to Britain's shock exit in June.
"The markets are very stable," said Robert Halver, head of capital markets analysis at Baader bank in Frankfurt. "They are crisis-tested; they have grown tough skin."
He also expects the European Central bank (ECB) to encourage a pro-European decision in the coming election.
"[T]he 'SEKE', the special forces in Europe will do everything in their power to appease voters until election day in Italy," Halver said referring the ECB as Europe's "special forces" and saying increased lending should sway result of the Italian vote in favour of the EU.
"[T]hey shall put their little cross in the right place, with election gifts from the ECB."
Markets had earlier taken some encouragement when Austria's far-right presidential candidate was soundly defeated by a pro-European contender, confounding forecasts of a tight election.
The European Central Bank meets Thursday amid much speculation it will announce a six-month extension of its asset buying programme and widen the type of bonds it can purchase.
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