LONDON (Reuters) – The euro and Italian government bonds continued on Tuesday to cheer German- and French-led plans for a 500 billion euro EU coronavirus recovery fund, though stock markets were suffering fatigue after their best day in months.
French President Emmanuel Macron listens at a joint video news conference with German Chancellor Angela Merkel to discuss Europe’s economic recovery plans to respond to the coronavirus crisis at Elysee Palace in Paris, France May 18, 2020. Francois Mori/Pool via REUTERS
There was still a sense of optimism after Monday’s news that early-stage tests on a possible COVID-19 vaccine had also proved encouraging, but the momentum had shifted.
Europe’s STOXX 600 index gave up an early rise to slip 0.7% after surging 4% in the previous session, oil began to tread water [O/R] and safe-haven U.S. government bonds were making ground again in the debt markets. [GVD/EUR]
“The Franco-German proposals are ambitious, targeted and, of course, welcome,” European Central Bank President Christine Lagarde said of Monday’s plan, which would move the EU in the direction of a so-called ‘transfer union’.
The euro was buying $1.0950, up more than 1% against the dollar since the plan was announced.