Herald<http://www.heraldsun.com.au/business> Sun
UK bank warns of eurozone break up
* by: Jeff Whalley
* From: AAP
* January 02, 2012 12:00AM
Britain's major banks speculate that the eurozone is closer to crumbling. Source: AP
THE Australian sharemarket is expected to come under further pressure tomorrow after markets in Europe, Asia and South America closed down for the year.
This came amid renewed speculation from one of Britain's major banks that the eurozone is closer to crumbling.
And the euro dropped below 100 yen for the first time since June 2001, as traders continue to flee the single currency.
"Euro/yen is the ultimate risk-off trade at the moment," Forex.com research director Kathleen Brooks said.
The chief executive of Standard Chartered, one of Britain's biggest banks, said the lack of political leadership in Europe was making the break-up of the eurozone more likely.
"We enter 2012 with a very difficult outlook for the eurozone (and) with an increasing possibility of countries actually leaving the eurozone," Standard's chief Peter Sands said.
But Commsec chief economist Craig James earlier said euro nations "will do what it takes" to prevent the currency region from collapsing.
Mr James predicted another 0.25 per cent interest rate cut in February to protect the economy from the tumult in Europe.
"Clearly with inflation under control and significant risks abroad, the Reserve Bank stands ready to cut rates and shore up Australia's economy," Mr James said.
At the end of trade in 2011, London's benchmark FTSE 100 ended the year down 5.5 per cent.
Frankfurt's DAX 30 finished the year down 14.7 per cent, while France's CAC 40 was down 16.95 per cent over the year.
While Japan's Nikkei had a 17 per cent fall, Hong Kong had a 19 per cent drop, Bombay had a 25 per cent fall and Brazil was 18 per cent down.
An exception was the US's Dow Jones Industrial Average, which managed to come in with a 5.6 per cent gain for the year.
And it was only a burst of trade at the close of the year that prevented the S&P 500 finishing ahead for the year.
with AAP
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