Europe signals uproar at markets; watch out for local cues

Moneycontrol Bureau

While frenzied activity in the last leg of trade saw the Nifty closing below the psychological 5000 mark, there was good news from India on the policy front late last evening. However, global concerns, especially of debt crisis spreading to healthy economies, continue to shake market sentiment.

Steep losses were recorded on the Wall Street as investors reacted to news every news about Eurozone. The S&P breached a key technical level of 1,225 and the CBOE Volatility Index jumped above 34 indicating frenzy at the market.

Europe too hit a six-week closing low as rising sovereign bond yields intensified investor concerns. Yields in an auction of 10-year Spanish bonds rose to a record high since the country joined the euro zone. A French bond auction too saw high yields. Additionally, reports say that European banks may have to write down some of the USD 270 billion goodwill from their purchases in the run up to financial crisis, before they can sell assets or new stock to strengthen capital.

Meanwhile, Asia stocks have retreated to the red in morning trade today. The MSCI Asia Pacific Index took a nearly 2% knock-down, heading for a third week of losses as as concern grew that Europe