World markets steady as EU finance tax gains traction

European and American financial markets watchers continued to press for action on the crisis in the Eurozone, with signs the German Parliament is poised to support creation of a European Monetary Fund, and high level support emerging for a an EU-wide financial transactions tax.

Equities markets across Europe were down slightly overnight, with the FTSE100 standing at, 5,217.63, down 1.44 per cent at 7.30 am. NZT, the German DAX index down 0.89 per cent at 5,578.42, and the Stoxx Europe 50 down 0.79 per cent at 2,176.64.

In the US the Dow Jones Industrial Index was down fractionally at 11,116.70 after rising a little earlier in the day, while the S&P500 was off 1.13 per cent slightly at 1,162.12 as one leading pundit, Nouriel Roubini of Roubini Global Economics saying Europe and the US were "running out of policy bullets" to fix the current crisis.

However, one key new proposal gaining ground is the call from European Commission president Jose Manuel Barroso for the imposition of a financial transactions tax within the eurozone.

The proposal would aim to raise US$78 billion annually and come into effect in 2014, placing a 0.1 per cent impost on all transactions involving EU-based institutions, and a 0.01 per cent tax on financial derivative contracts.

Barroso said banks had contributed to the ongoing crisis in the world's largest economies and that a financial transaction tax, sometimes called a "Tobin tax", would ensure "the financial sector makes a fair contribution at a time of fiscal consolidation in the member states."

However, the BBC reports the UK government is already signalling its opposition to the proposal.

Meanwhile, the German Chancellor, Angela Merkel, continues to fight for a parliamentary majority to approve an expansion of the European Financial Stability Facility, a stop-gap measure ahead of the potential for the creation of a new European Monetary Fund and the introduction of collectively issued Eurobonds to help fund the region's debt crisis.

A vote is due on Thursday, European time.

Elsewhere, Reuters reported stiff resistance from private sector lenders to informal proposals to require a greater write-off of Greek government debt than the 20 per cent they are currently being asked to shoulder as part of the rescue plan for the poster-child economy for Europe's woes.

With global leaders growing increasingly frustrated by the EU's slow progress on its debt crisis, Nouriel Roubini told a Bloomberg seminar he believed a global double dip recession is imminent in advanced economies.

"I think we're already into one in the US based on the hard and soft data - same with most of the euro zone, same with the United Kingdom."

However, some commentators took heart from August US capital goods orders, which were the strongest in three months.

One bright spot in US equities was Amazon, the online retailer, which launched its US$199 Kindle Fire tablet, a low-cost competitor to the iPad, to market approval. Amazon shares were up 4.6 per cent to US$234.62.

Elsewhere, key commodity stocks tumbled, with Dow Chemical and Alcoa each losing more than 3.6 per cent of their value.

Gold continued its fall of recent times, down 2.81 per cent to US1,606.10 an ounce, while Bloomberg reports that oil for November delivery on the New York Mercantile Exchange is fell 3.6 per cent overnight to US$81.37 a barrel on concerns about weakness in Europe further infecting other major economies.