Former Federal Reserve chief Alan Greenspan stressed the eurozone is not functioning, saying insufficient balances in the economic stability of EU member countries make the current duty of the single currency a major area of concern.

Greenspan emphasized the great difference among European Union states, with the EU's more wealthier states including Germany regularly financing the shortages of southern countries.

The ex-central bank head, who has been critical about the bloc, said this divergence should not persist. He mentioned the European Central Bank is grappling with greater challenges than the Fed, noting the ECB's balance sheet is bigger than ever.

He also expressed his apprehension regarding the euro's prospect.

Treasury yields ended little changed after the European Central Bank ruled to keep its policy stance, but underlined that it could raise the size and scope of its bond purchasing program to aid the eurozone reach its inflation target.

Remarks by ECB President Mario Draghi helped to cool the impact of comments made by the top central banker later in June, which were perceived as laying out the stage for the unwinding of easy-money policies, jolting global government-bond markets.

Yields on U.S. government bonds retreated in the morning as Draghi said that he was still not perceiving indications of a sustainable increase in inflation, but he was more optimistic regarding other indications of economic health in the eurozone.

The yield on the 10-year benchmark Treasury yield ticked down 0.2 basis point at 2.266 percent. The two-year yield rose 0.4 basis point to 1.360 percent, while the yield on the 30-year Treasury note fell 0.8 basis point to 2.838 percent.

European government bonds attracted buying, putting downward pressure on yields. The yield on the 10-year German bund slid 1.7 basis point to 0.526 percent. The yield on the 10-year French government bond also fell 2.4 basis points to 0.774 percent.

Tags: Policy

European Central Bank Mario Draghi tempered market expectations during his speech. But the initially dovish message by the euro area central bank was quickly overshadowed by talks of the inflation rate and an end to asset purchases.

The ECB held interest rates steady and left the asset purchases unchanged on Thursday, amid increasing speculation that it will begin to taper its ultra-loose monetary policy in the fall. The central bank also struck a somewhat dovish tone and asserted that it would be positioned to intervene should the outlook took a turn for the worst.

In its released policy statement along with its decision, it said that if outlook becomes less favorable of if the financial situation fails to keep up with the development of inflation, the Governing Council is prepared to expand the program in terms of size or duration.

The euro initially slid to $1.1489 versus the dollar after the news, reversing some of the gains it has seen in the recent weeks. The announcement also pushed up stocks on the Euro Stoxx 600 index, while the yields on the 10-year German bund was driven lower.

Tags: Policy

European stocks dropped as investors claim exporters will suffer due to a stronger euro, following European Central Bank President Mario Draghi's remarks which buoyed the common currency.

The pan-European Stoxx 600 Index closed 0.4 percent lower. The benchmark trimmed a gain that hit 0.5 percent prior to when Draghi said officials will discuss altering the ECB's bond-buying program.

A stronger currency has become a concern for investors amid the second-quarter earnings season, as strategists at Deutsche Bank warned that every ten percent in the euro takes five percent off the STOXX 600's earnings.

Europe's basic resources sector was the largest decliner, losing 1.9 percent, with export-heavy aerospace defense companies and autos all under pressure.

European banks fell 0.4 percent, led lower by a 5.2 percent decline in Nordea's shares. The Nordic region's largest bank by market value dropped after posting second-quarter operating earnings below analysts' estimates. Danske Bank fell 1.4 percent following its quarterly earnings.

Germany's Lufthansa led the travel and leisure sector, which tumbled 8.6 percent. British budget airline easyJet dropped almost six percent following cautious comments on the outlook for summer pricing.

Technology stocks were led higher by Ingenico Group, rising over five percent, after reports that it will buy rival Bambora for 1.5 billion euros.

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Jul 24 at 2:39 UTC

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