Eurozone Inflation Leaps Higher Delivering 'headache' to European Central Bank


Political risks in Italy drove the Euro to a multi-month low against the U.S. Dollar. The reports revealed that the populist trio of the 5 Star Movement, the League, and Brothers of Italy announced their intent to create a coalition.

"Because the third greatest financial system within the European Union, as a closely indebted one, and with Eurosceptics seemingly within the ascendancy markets have anxious that the European Union once more faces an existential disaster", Greg McKenna, chief market strategist at AxiTrader, mentioned.

The handover of power follows an inconclusive March election and months of political turmoil which had spooked global financial markets and spread unease among Italy's European Union partners.

He also warned that Italy "must never forget the very serious risk of losing the irreplaceable asset of trust". However, gains were capped below $1,307 by a broadly stronger US dollar.

Investors dumped Italian government bonds, driving borrowing costs sharply higher for that country and rekindling fears of more financial strain for Europe's third-largest economy.

"I'm too young to remember much about the time before the euro, but I like going on vacation to France and Spain", he said. The dollar fell to 108.60 yen from 109.77 yen. Shares in Italian banks Banco BPM, BPER, UBI and Intesa Sanpaolo were among the biggest risers on the STOXX, up between 4.9 percent to 7.5 percent after sustaining heavy losses in the previous month. That's the highest rate since April a year ago and brings the headline inflation rate up to the ECB's goal of just below 2 percent.

Meanwhile, in the United Kingdom, The Sterling edged up by 0.08 percent against the Greenback on Thursday, to trade 1.32954 at the close. The Hang Seng in Hong Kong slipped 1.2 percent to 30,101.98 and the Shanghai Composite index fell 2 percent to 3,058.12.

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Deficits are lower, economic growth is stronger, and more people have jobs.

Over the weekend, populist parties attempted to form a government, which ultimately failed after Italian president Sergio Mattarella vetoed their choice for finance minister, Paolo Savona, a euroskeptic who once described the eurozone as "a German cage".

That country's parliament will hold a vote of no confidence in Prime Minister Mariano Rajoy after graft convictions of businesspeople and officials tied to his conservative Popular Party. The euro sank to $1.1531, its lowest since July, from $1.1669.

Italy's 10-year bond yields had risen on Tuesday to over 300 basis points higher than Germany's - a sign of surging investor doubts over Italy's financial stability.

The pan-European FTSEurofirst 300 index rose 0.23 percent. Brent crude, used to price global oils, shed 38 cents to $75.11 a barrel in London.

ENERGY: U.S. crude oil fell 27 cents to $66.46 per barrel in electronic trading on the New York Mercantile Exchange. It dropped 1.7 per cent to $66.73 a barrel in NY. Temporary, it looks that repositioning on Italy had reached some kind of exhaustion move.

ASIA'S DAY: Japan's Nikkei 225 stock index dropped 1.5 per cent to 22,018.52.