European stocks were mixed Tuesday following the previous day’s sell-off as overseas markets were open during the Labor Day holiday in the U.S.
Investors are worried the fiscal problems in Europe are worsening and infecting other markets. The Stoxx Europe 600 Index fell about 4% on Monday.
European banks took the brunt of the hit as the euro fell to $1.42, the lowest in one month, report Brian Blackstone and Laura Stevens for The Wall Street Journal. The high public debt and snail-like pace of economic growth seen in developed markets has investors jittery about the possibility of a double-dip recession.
“There is clearly a recognition that the debt crisis started in Europe, but the story is similar across the Western world,” said Silvio Peruzzo, economist at Royal Bank of Scotland.
Recent economic data points to a bleak picture for both developed markets, as the U.S. posted no job growth and economic risk is still strong. [Spain ETF in Focus After Bond Auction]
Major changes are being addressed on the way the Eurozone is functioning and leaders are inching toward a centralized financial authority. Issues of taxation, bond issuance and budget approval are areas in need of structural power, report Louise Story and Matthew Saltmarsh for The New York Times.
“If today’s policy makers want to successfully stay the course, they will have to press ahead with structural changes and deeper economic integration,” said Antonio Borges, director of the International Monetary Fund’s European unit, in the report. “To put the crisis behind us, we need more Europe, not less. And we need it now.”
European markets were choppy Tuesday following news the Swiss National Bank set a floor on the euro/franc exchange rate.
Tisha Guerrero contributed to this article.