8 May 2012

Euro down after French and Greek elections

3:29 pm on 8 May 2012

The euro fell against the dollar and the pound on Monday following weekend election results, which cast doubt on European austerity plans.

Pro-bailout parties in Greece performed poorly, while Francois Hollande won the presidency of France, promising to focus more on growth.

The euro fell as low as $US1.295, its lowest since January, later recovering to $US1.305.

It also dropped to three-year lows against the pound.

Main European stock markets fell early before recovering. In Frankfurt, the DAX fell by more than 2%, but closed up 0.1%. In Paris, the CAC-40 recovered to trade up by 1.65%.

Athens shares fell by as much as 8.3%. In London, markets were closed for a bank holiday.

In New York, the Dow Jones opened down by 0.3%.

Asian markets also fell, with the Nikkei in Tokyo dropping 2.8%. The Kospi in Seoul shed 1.8% and the Hang Seng in Hong Kong dropped 2.4%.

The BBC reports there is concern whether new France President Francois Hollande will be able to work as closely with German Chancellor Angela Merkel as his predecessor Nicolas Sarkozy did. The two were the driving force behind the eurozone's fiscal compact.

Mr Hollande stood on a platform of promoting growth rather than concentrating on austerity.

Mrs Merkel said on Monday the European Union's fiscal pact is not up for renegotiation. Mr Hollande wants to reopen the debate.