The Turkish Lira fell 2.5% on Monday after the U.S. suspended visa services between the two countries. That disrupting an otherwise upbeat Monday which saw world shares rise with Chinese stocks hitting 21-month highs and German a record as political unrest eased elsewhere. Kate King reports.
A deepening diplomatic spat between Turkey and the U.S. spilling on to the markets on Monday. The Turkish Lira falling 2.5 percent, while stocks and bonds also tumbled, after both countries suspended visa services for each others citizens. Among shares worst hit was flag carrier Turkish Airlines, which dropped 8 percent. The U-S accounts for around 10 percent of the airlines' sales. Chinese markets started on an upbeat note following a week-long holiday. Banking and real estate stocks leading the charge with indexes touching 12 month highs. Boosted by an upcoming cut in bank's reserve requirement ratio - with the additional liquidty seen as good news by analysts. That, outweighing data out on Monday which showed the Chinese service sector grew at its slowest rate for almost two years in September. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, DAVID MADDEN, SAYING: "It isnt a terrible reading, it's just a dissapointing reading, by and large the overall economic inidcators coming out of China for the last couple of months would suggest it remains on track to reach its 2017 growth target." In Europe, Germany's Dax touched a record high and Spains IBEX reach its highest point in a week - as tensions between Spain and its wealthy region of Catalonia appeared to ease. (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING (on CATALONIA): "The worst case would be for Catalonians to say we are leaving. That would lead to a mass exodus to the rest of Spain. But it doesn't have to get that far. If the situation does not escalate that would be positive for German stocks." Several spanish businesses are still debating whether to move their headquarters away from the region - for fear of unstable business.