The euro slides to a fresh 12-year low, lifting euro zone stocks to new peaks as investors bet that the currency's relentless fall will improve the region's corporate earnings prospects. As Joel Flynn reports the changing market conditions are partly to blame for the stalling of a merger between the world's two biggest cement makers.
No sign of a smile on Frankfurt's trading floor - but the mood here is good, as Germany's DAX hits a record high. The stock market index pushing past 12,000 points for the first time ever. This is no surprise for analysts though, says ICF Bank's Arthur Brenner. SOUNDBITE: ICF Bank Fixed Income Specialist, Arthur Brunner, saying (German): "We almost reached the 12,000 point mark on Friday already so it was only a question of time. The euro remains weak against the dollar which is momentum enough, so it was only a question of time until the DAX reached the 12,000 mark." Broader gains too in the rest of Europe's markets. Investors betting the weak euro will boost the region's economy and lift exporter earnings. The ECB's bond-buying programme has pushed down bond yields - driving investors into stocks and the single currency. The euro losing around 25 percent of its value against the dollar since May last year. James Bevan is from CCLA. SOUNDBITE: Chief Investment Officer CCLA, James Bevan, saying (English): "There are two rather separate impacts of quantitative easing, the first will be to drive the appetite for risk taking up, as people come out of bonds, secondly the weaker euro may add 10 to 15 points of return to corporate profits in euro land." Siemens and Actelion are two big winners in Europe. But not all companies are benefitting from the falling value of the euro. Lafarge's proposed merger with Holcim falling through after the latter said a change in market conditions merited a renegotiation. Holcim too citing governance concerns. Share prices in both companies falling. SOUNDBITE: Chief Investment Officer CCLA, James Bevan, saying (English): "I'm surprised we get to this very late day before serious issues circulate and the degree of surprise is obviously reflected in the extraordinary share price movement today. That said I do think there is industrial logic behind the merger and it will proceed in due course." Eyes in Europe now move towards the Fed's interest rate decision on Wednesday. Suggestions of a June rate rise pushing the dollar up further against the euro. That could hit U.S. company results as well - more good news for Europe's exporters looking for a competitive edge.