By FX Empire.com

The deepening and unsolved situation in the euro area continue to spur pessimism around the financial markets on Wednesday, adding more jitters to the global economy especially amid the growing political turmoil in Greece and Italy and the absence of economic fundamentals from the world’s leading economy, where worries doubled after LCH Clearnet SA unexpectedly raised its margin requirements on Italy’s government bonds, propelling yields on Italian bonds to shatter a record above 7 percent yesterday.

Markets are more concerned than ever, especially after LCH Clearnet SA took that decision which could actually cost Europe another massive bailout for debt-trapped Italy, knowing that Portugal and Ireland were forced to seek bailouts from the European Union and International Monetary Fund when their borrowing costs reached nearly the same levels. Accordingly, traders are demanding more safe havens and are mostly less appealed to higher-yielding assets on Wednesday.

The U.S. dollar gained against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 77.70, compared with the opening level at 76.66. The Euro declined sharply against the Dollar, where the EUR/USD pair traded at $1.3603, compared with the opening level at $1.3824, the British Pound dropped slightly against the Dollar, where the GBP/USD pair traded around $1.5957, compared with the opening level at $1.6098, and the U.S. dollar steadied against the Japanese Yen, where the USD/JPY pair was trading at 77.72, compared with the opening level at 77.71.

Stocks in the United States posted bigger losses compared to yesterday’s mixed gains, as the Dow Jones Industrial Average was lower by nearly 1.8% to trade around 11945, while the S&P 500 index was down by nearly 2.1% to trade around 1249. European stock indexes were lower before closing on Wednesday, where FTSE 100 was down by nearly 2.1% to trade at 5449 and the DAX was down by nearly 2.1% to trade around 5834.

Gold prices were slightly lower on Wednesday to trade now around $1793.39 an ounce after opening at $1789.02 an ounce, while crude oil prices also fell slightly after earlier gains, following the EIA report which showed that crude oil inventories decreased by 1.4 million barrels in the past, to trade around $96.74 a barrel after opening at $97.65.

Originally posted here