July 2 - The euro dips as the euphoria over last week's deal to tackle Europe's escalating debt crisis ebbs, and weak economic data fuels concerns over the global growth outlook. Jamie McGeever reports.
European markets kicked off the third quarter on a strong footing - lingering optimism from last week's EU summit masked more gloomy economic data, pushing stocks higher and bond yields lower. The borrowing costs of euro zone heavyweights Italy and Spain fell to their lowest in weeks - Italy below 6 percent, and Spain well below the key 7 percent level it was above as recently as Friday. Leading the equity charge once again were financial - European bank stocks were up almost 2 percent, double the rise of the benchmark FTSE Eurofirst 300. The black sheep of European assets though was the euro - down two thirds of one percent and back below 1.26. Robert Halver is a trader in Frankfurt. (SOUNDBITE) (German) TRADER WITH BAADER BANK, ROBERT HALVER, SAYING: "The first euphoria is gone. We know that soon a united Europe will soon mean a united debt. Now debt can be accumulated without any collateral, especially for Italy or Spain. That will be very dear for the rest us of, we all know that here at the stock exchange." So FX traders are taking a less rosy view of the summit and are possibly starting to price in a rate cut from the ECB later this week. Jamie McGeever, for Reuters.