Lack Of Fundamentals from major economies pushes investors to safety

European stocks followed its peers in Asia and dropped significantly throughout the final trading session in this week, affected by the absence of fundamentals, nonetheless, other news dominated the scene in Europe.

Starting with the European Central Bank, where member Honohan stated that he personally see 'Stronger Tone' for Europe's economy over the upcoming period, with no inflation threats, while Bundesbank president Axel Weber warned that ECB's government-bond purchase program that was presented in may should be stopped immediately as he sees further problems still lay in the path of recovery.

Member Honohan stated that 'There is a stronger tone to the numbers, suggesting that it was good news,' adding that 'There is every indication that inflation expectations are steady, are not moving around, and the projection of actual inflation is still well within where we would like it to be.'

Europe's growth during the second quarter showed bigger than expected expansion, where the economy of the 16-nation expanded by 1.0 percent during the past year, higher than estimates, while Germany, Europe's largest economy, it witnessed the fastest expansion in nearly 20 years during the past month.

Inflation is still the major obstacle in the European region, where UK and the 16-nation economy still believe that inflation currently won't pose any threat to economic recovery throughout this year despite that inflation levels in both countries is constantly rising.

Euro zone CPI rose by 1.7 percent during July, compared with the same period last year, the most in nearly two years, while UK constant suffering from inflation, forced the BoE's Chairman Mervyn King to write a letter to the Chancellor of the Exchequer George Osborne, to explain the rise in inflation levels over the past period.

Bank of England projects that inflation will remain elevated during 2010, before it gradually decline to reach 1.5 percent during 2012, which is below the desired levels set by the bank at 2.0 percent.

Today's absence of fundamentals caused investors to target safety, the euro fell severely, along with stocks and commodities, while the main focus returned to the dollar once again as the US is believed are enjoying better economic conditions, despite the recent easing in economic conditions that was witnessed from the start of the second half of this year.

The EUR/USD pair sank to trade at 1.2700, compared with the opening levels of 1.2820, while the GBP/USD pair depreciated to trade at 1.5466, compared with the opening levels of 1.5600.

The US dollar index, which tracks the performance of the dollar against a basket of currencies, surged on the daily basis to trade at 83.005, compared with the opening levels of 82.522. Gold retreated to trade at $1229.53 an ounce, compared with the opening levels of $1231.94 an ounce, while oil contracts for October delivery fell to trade at $73.55 a barrel, compared with the opening levels of $74.75 a barrel.

As of 6:14, all European stock indices traded lower with FTSE 100 trading 27.26 points below yesterday's closing levels, as it shed 0.52 percent to trade at 5184.03, while CAC 40 index lost 26.00 points or 0.73 percent to trade at 3546.40 and finally the DAX Index retreated 45.44 points or 0.75 percent to trade at 6029.69 levels.