The iShares MSCI France Index (EWQ) fell sharply with European equities on Friday as traders were reluctant keep long positions into the weekend on worries of a potential credit event in Europe. EWQ was down 5% in afternoon trading Friday in the U.S.
Stock ETFs pulled back after the European Central Bank said executive board member Juergen Stark is stepping down. French lawmakers recently approved a contribution to the Greek bailout plan.
France’s upper house, the Senate, has approved measures to contribute to Greece’s bailout package. The aid is approved along with Nicholas Sarkozy’s domestic austerity plan for France.
“If we do nothing, it will be a catastrophe. If we do too much, it will be a recession,” Sarkozy told lawmakers, reported by ChannelNewsAsia, insisting that deficit reduction should not be allowed to hurt jobs and growth.
France will contribute €15 billion to the €160 billion plan that was approved in July. Meanwhile, France is working on adding a tax to all financial transactions, which would be a practice adopted by other eurozone countries. William Horobin for The Wall Street Journal explains that the eurozone countries are working on a tax for trading shares and bonds. France and Germany are already backing the notion.
“We wouldn’t weaken European markets and we would bring in between €20-40 billion,” Jean Leonetti, France’s European affairs minister, said. The idea would work best if all G20 nations adopted the practice, but if that doesn’t happen, the eurozone will go it alone, he said.
iShares MSCI France
Tisha Guerrero contributed to this article.