Stocks traded up slightly in Europe during the first day of trading in 2012, with the Stoxx Europe 600 Index gaining 0.8 percent. However, 2012 should prove to be a pivotal year for the continent and the eurozone as efforts to save the embattled currency come to a head.
$200 Billion in Debt Maturing
As the Euro celebrates its 10 year anniversary, having first been implemented on January 1st, 2011, the eurozone finds itself in dire straits. The eurozone, the 17 nations using the Euro as their currency, will have some $208 billion maturing in the first three months of 2012 according to UBS (UBS).
Yields Falling for Italian, Spanish Bonds
One of the biggest concerns for Europe has been the skyrocketing bond yields in Italy and Spain. The governments of Greece, Ireland, and Portugal all required bailout after bond yields exceeded 7 percent, but the larger economy of Italy would most likely have broader and farther reaching consequences. Bond yields were hovering at around that 7 percent mark towards the end of 2011, but a new lending program by the European Central Bank (ECB) helped to drive those yields down below 7 percent, with Spanish yields also falling. With massive amounts of debt maturing early in 2012, it will be all the more important to these two struggling countries to borrow at lower rates.
Sarkozy and Merkel to Meet
Nicolas Sarkozy and Angela Merkel have made plans to meet on January 9th for a "working lunch" in order to plan for the slate of meetings, the most important of which is a European Union summit coming up on January 30th. Sarkozy and Merkel proposed plans to the EU for a comprehensive new treaty that would enforce fiscal discipline throughout the continent, but David Cameron and England balked at the treaty changes, forcing the eurozone to pursue their own deal separately. Now, Sarkozy and Merkel have to struggle to ensure that their new plan is implemented as battles within national parliaments and with England.
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