G.O.O.D

Jean-Claude Trichet

Source: Bloomberg.com: Germany

European Central Bank President Jean- Claude Trichet said the euro region’s economy will shrink next year for the first time since 2003 after the bank delivered the biggest interest rate cut in its 10-year history.

“Global and euro-area demand are likely to be dampened for a protracted period of time,” Trichet said at a press conference in Brussels today. The ECB lowered its benchmark by three quarters of a percentage point to 2.5 percent.

The ECB’s decision came after the Bank of England today cut its key rate by one percentage point to 2 percent and Sweden’s central bank lowered borrowing costs by the most since 1992. The Federal Reserve’s benchmark rate now matches a five-decade low as central banks rush to respond to the global recession.

“The level of uncertainty remains exceptionally high,” Trichet said. The euro was little changed after his comments and traded at $1.2634 at 3:16 p.m. in Brussels.

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Technorati Tags: European Central Bank

Source: Reuters

A tentative rebound in global stocks spluttered on Wednesday while euro zone government bond yields hit a three-year low as gloomy economic news highlighted the case for more aggressive interest rate cuts in Europe this week.

The euro stayed on the backfoot and oil held near a 3-1/2 year low a day before the European Central Bank, Bank of England and Sweden’s Riksbank are all widely expected to cut borrowing costs.

Supporting those expectations, economic reports on Wednesday showed the euro zone’s services economy fell deeper into recession in November than initially thought and inflationary pressures eased.

“This is a horrible survey across the board, showing that the euro zone service sector is being hit ever harder by the financial crisis, muted consumer spending and markedly weaker activity in key export markets,” said Howard Archer, economist at IHS Global Insight.

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Technorati Tags: European Central Bank, Bank of England, Riksbank

Source: MarketWatch

The Frankfurt-based European Central Bank on Thursday cut its key lending rate by half of a percentage point to 3.25%. Earlier Thursday, Bank of England slashed its key rate by an unexpected 1.5 percentage points to 3%.

Technorati Tags: European Central Bank

Source: Reuters

European shares fell heavily on Monday as fallout from the credit crisis hit the region’s banking sector, forcing partial nationalization of two banks and leaving investors to ponder the impact of a U.S. bailout plan.

The euro and sterling fell in the wake of share prices sliding, while safe-haven government bond prices rose.

Money markets remained frozen with banks refusing to lend to one another for all but the shortest periods, prompting the European Central Bank to offer additional funds.

The hard-fought U.S. proposal to establish a $700 billion fund to buy illiquid securities will be sent for a Congressional vote later on Monday after days of tense negotiations and compromises.

But European worries threatened to overshadow the proposal after the Belgian, Dutch and Luxembourg governments were forced to rescue financial firm Fortis over the weekend to prevent a domino-like spread of failure.

In addition, the UK government said that lender Bradford & Bingley’s branch network will be sold to Spanish bank Santander and the remainder of the group would be nationalized.

“The nationalizations have an incredibly negative read across for the sector,” said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton.

“The contagion is spreading to mainland Europe and everyone’s asking: who’s next?” he added.

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