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. Last Updated: 07/27/2016

Euro Rises, Falls on German Remarks




LONDON -- The embattled euro fell then bounced on Wednesday after comments from a German economist, while European shares firmed strongly, with oil majors leading the way on higher crude oil prices.


The euro dropped nearly half a cent toward its life low of just under $1.011 after Horst Siebert, a senior economic adviser to the German government, said the currency could fall as low as 90 cents.


But it then rallied when Siebert said his comment was not a serious forecast and added that he saw the euro rising as the European economy picks up and the U.S. economy weakens.


Asked in an interview with German television channel ZDF how much further the euro could fall, Siebert, a member of the government's economic advisory council known as the Five Wise Men, said, "It can still go a bit further."


Asked to predict a level, Siebert said, "I don't want to mention figures but we could also have a relation of 0.90 [to the U.S. dollar]."


The euro/yen rate was holding above 123 after earlier falling close to its 122.53 lifetime low.


In Frankfurt, Germany's blue chip DAX index rallied 1 percent after dropping 1 percent Tuesday.


The main gainer was telecoms group Mannesmann AG, which gained 3.3 percent after it said it had withdrawn from the bidding for British mobile phone operator One2One.


"This relieves some potential pressure on Mannesmann's earnings this year," one trader said. Mannesmann has already agreed this year to buy fixed line telecommunications operator Otelo Communications GmbH from RWE AG and Veba AG for 2.25 billion Deutsche marks ($1.17 billion).


One2One is jointly-owned by Cable and Wireless and MediaOne Group Inc., who sought pounds 11 billion ($17.08 billion).


The Financial Times reported that One2One might now be floated.


In London, Cable and Wireless shares shed 3 percent as hopes of a sale of One2One faded.


But the Britian's benchmark share index, the FTSE 100, was up 0.9 percent after a shaky start, helped by stronger oil stocks with support from firmer banks.


Index heavyweights BP Amoco and Shell Transport and Trading rose 1.8 percent and 1.3 percent respectively as crude oil prices continued to rise.


Brent blend crude oil opened at new 20-month highs and was last up another 30 cents at $19.33 a barrel in London after overnight figures showing a sharp fall in U.S. stock levels confirmed a tightening supply picture.


In the banking sector, Bank of Scotland PLC rose 2.7 percent, while Lloyds TSB Group PLC rose 2.2 percent and Barclays PLC gained 2.8 percent.


Initially, British stocks struggled to make progress in the face of falling Hong Kong stocks and economic woes in Argentina. But a partial recovery in New York helped lift sentiment and British economic data came in positive.