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Swiss shock as Europe jitters continue

Tuesday, September 06, 2011 - 02:19

Sept. 6 - The Swiss National Bank has set a minium exchange rate target of 1.20 francs to the euro and European markets fall even further on Tuesday as investors remain concerned about the euro zone debt crisis. Joanna Partridge reports

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There was no repeat of Monday's sharp falls on European markets but an early recovery was short-lived. Investors are still concerned about what politicians are doing to solve the euro zone's debt crisis. Robert Halver is a trader in Frankfurt. SOUNDBITE: Robert Halver, Baader Bank, saying (English): "I guess many are not willing to invest in this crazy market. That's why we still have this high level of resignation." And those who are willing to invest are still flocking to traditional safe havens like gold, which keeps hitting new record highs, and the Swiss franc, which has soared by a third since the collapse of Lehman Brothers in 2008. The strength of the Swiss franc is now threatening the country with recession and the Swiss National Bank shocked foreign exchange markets by saying it was setting a minimum exchange rate target of 1.20 francs to the euro. Louise Cooper is Senior Financial Analyst at BGC Partners. SOUNDBITE: Louise Cooper, Senior Financial Analyst at BGC Partners, saying (English). "Intervention doesn't normally work, central bankers talking about weaker or stronger currencies may have a short-term move but doesn't have a long-term move, the reason why is they require capital controls to back up their words and Switzerland being such an open economy for trade, so it's never going to go the route of capital controls. So I think what's interesting is what they're saying, the strength of their wording really indicates just quite much damage the strong Swiss franc is doing to Switzerland's economy." In contrast European banking shares have slumped, returning to levels not seen since the collapse of Lehman. The euro zone debt crisis continues to make investors wary of banking stocks. The French Finance Minister insists policymakers are doing all they can to protect growth. SOUNDBITE: Francois Baroin, French Finance Minister, saying (French): "Of course growth is now dependent on the economic environment in America and the rest of the world, on uncertainty in the euro zone. But we have tried and that's our top priority, the stability of the euro zone." But Greece, the first country to receive a bailout, is still struggling with its mountain of debt. And calls for European policymakers to either bail it and other indebted nations out properly, or let them collapse, are getting louder. Analysts say as long as the debt crisis remains unresolved, markets are likely to stay choppy. Joanna Partridge, Reuters

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Swiss shock as Europe jitters continue

Tuesday, September 06, 2011 - 02:19