- POSTED: 11 Jul 2014 06:16
Worries about a major Portuguese bank sent investors scrambling for currencies considered to be safe havens, such as the US dollar and the yen.
NEW YORK: Worries about a major Portuguese bank sent investors scrambling on Thursday for currencies considered to be safe havens, such as the US dollar and the yen.
Fears over the health of Portugal's largest listed bank, Banco Espirito Santo, rattled stock markets in Europe and across the Atlantic, though Wall Street shares pared their losses to end modestly lower.
"Portugal was certainly an issue... the news that there is a concern about a missed payment by the country's second-largest lender certainly created a lot of volatility," said Alan Skrainka of Cornerstone Wealth Management.
Kathy Lien of BK Asset Management said the missed debt payment by the Portuguese bank was a major factor sapping the euro's three-day rally.
"Portugal's problems bring back the dark memories of the Eurozone sovereign debt and banking crisis," Lien said.
News of the problem in Portugal's banking system came as official data showed France and Italy were the latest of Europe's biggest economies to post poor industrial production data, with Italian output falling the most since November 2012.
Germany and Britain have already issued disappointing figures for May, raising fears that Europe's economic recovery may be stalling.
"Europe is back in the spotlight but for the wrong reasons," Lien said. "Data released Thursday were weaker than expected, and further evidence that without strong policy measures, the Eurozone will have difficulty improving its recent lacklustre growth pace."