Wednesday, September 26, 2012

Euro zone worries sends shares lower

(Reuters) - European shares fell sharply and the single currency hit a two-week low on Wednesday as popular opposition within the euro zone to budget austerity measures unnerved investors already worried about a weak global growth outlook.

The market's focus was on Spain and Greece: protesters clashed with police in Madrid on Tuesday as the government prepared to unveil its 2013 budget on Thursday; and Greeks held a general strike as ministers sought to renegotiate a bailout.

The worries over a worsening in the euro zone's financial crisis have contributed to a sharp rise in volatility on equity markets, leading to the worst day since June for the S&P 500 index on Tuesday and subsequent falls across Asia.

"With the demonstrations in Madrid on Tuesday, the euro zone crisis is intensifying again, and this had an immediate impact on U.S. indexes last night," FXCM analyst Nicolas Cheron said.

Also fuelling negative sentiment, Philadelphia Fed President Charles Plosser said on Tuesday that the Fed's latest monetary stimulus will not do much to boost economic growth or lower unemployment and raises the risk of longer-run inflation. Read More