Banks, markets await European stress test results

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Once the European results are out and digested, investors will focus on what the failing banks to shore up their capital position — the likelihood is that governments will have to bear the cost.

“The more important aspect is what measures governments are putting or will put in place to support any institutions which fail, and whether the overall level of capital that the stress tests suggests needs to be raised actually matches what markets are assuming needs to be raised,” said Marc Ostwald, markets strategist at Monument Securities.

The euro will likely bear the initial market reaction — the results will be released after Europe’s bond and stock markets close on Friday but New York will still be open.

The euro has advanced over 10 cents since hitting a four-year low of $1.1878 in early June on a combination of easing worries over Europe’s sovereign debt crisis and concerns about the U.S. economic recovery.

The euro was trading higher Friday at $1.2945.

Associated Press writer Bradley Klapper in Geneva contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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