THE WALL STREET JOURNAL: Pessimistic words on the economy from senior officials of Hungary's newly elected ruling party plunged the euro to a four-year low Friday, and refocused concern on a region that European Union leaders had hoped was recovering from the wounds it suffered in the early days of the financial crisis.
Lajos Kosa, vice president of the right-leaning Fidesz party, which won an overwhelming victory in the April elections, said Thursday that Hungary was in a Greek-style sovereign-debt crisis. And Friday, the prime minister's spokesman, Peter Szijjarto, roiled markets by saying the economic situation is severe and that Hungary isn't likely to meet budget-deficit targets prescribed by the International Monetary Fund.
Hungary in 2008 became the first EU country since the U.K. in 1976 to take an IMF bailout. That fall, it lost access to capital markets and couldn't raise money to cover its deficits.
Mr. Szijjarto's remarks clobbered the Hungarian forint and the euro Friday. The reaction spilled over into sovereign debt-insurance markets across Europe and into the currencies of Poland and the Czech Republic, the two other large non-euro countries in the former Communist east.
The euro sank below $1.20 to a fresh four-year low, trading at $1.1966 late Friday in New York. The cost to insure against sovereign debt default rose sharply early Friday in Europe—to the highest levels in nearly a month for Greece and Portugal. Bigger economies, such as Spain and Italy, also saw debt-default insurance costs rise to their highest levels since at least the start of 2009, according to data provider Markit. >>> Charles Forelle in Brussels and Veronika Gulyas and Margit Feher in Budapest | Friday, June 05, 2010
TIMES ONLINE: The euro slumped to a four-year low against the dollar yesterday amid concerns that Europe’s debt crisis will worsen still further after Hungary said that its economy was in a “very grave situation”.
Stock markets in Europe and the United States also slid sharply lower as concerns about the worsening debt crisis combined with figures from the US showing slower than expected growth in American employment figures — and rumours of trading losses at Société Générale.
In London, the FTSE closed down 1.6 per cent at 5,126 points. In Frankfurt the Dax dropped more than 2 per cent, in Paris the CAC 40 was down 2.8 per cent, while Madrid slumped by an even more severe 3.8 per cent. In New York the Dow Jones industrial average fell more than 3 per cent, slipping under the 10,000 level to close at 9,931.97, while the S&P 500 and Nasdaq Composite indices both suffered losses of about 2.7 per cent. >>> Alexandra Frean, New York and Adam Sage, Paris | Saturday, June 05, 2010
