European ETFs Digest Gains

October 28th at 1:05pm by Tom Lydon

European stock exchange traded funds were easing back a bit Friday after the previous day’s big rally on the debt deal.

Relief came to markets and investors Thursday as European leaders and major global banks came to an agreement designed to contain the Eurozone’s debt crisis. ETFs focused on the region and the euro have made gains on the exhale this week.

“This is a collective sigh of relief that that the economy is continuing to grow and that political leaders can in fact step forward and deal with important and pressing issues,”Alan Gayle, chief investment officer at Ridgeworth Capital Management, said in an LA Times report. [Stock, Euro ETFs Soar on Debt Deal]

Rydex CurrencyShares Euro Trust (NYSEarca: FXE) jumped about 2% on Thursday. [Euro ETFs Rise on Expectations of Bailout Plan]

European officials created a deal that re-works their bailout fund and that will re-capitalize the Eurozone’s banks. Greece’s debt load will be reduced and banks will write off half of the debt. Voluntary private-sector creditors that held Greek debt will cut the obligation by 50%,  reports WSJ.com.The fine details are still vague and leaders say this fine-tuning will take months. [Europe ETFs Fall as Spotlight Stays on Greece]

Investors are watching to see if the agreements are enough to stop the debt crisis from spreading to other countries such as Italy, Spain, France and Portugal.

Diversified ETFs for Europe include Vanguard European ETF (NYSEArca: VGK) and SPDR DJ STOXX 50 ETF (NYSEArca: FEU).

Among single country ETFs, iShares MSCI Italy (NYSEArca: EWI) was down over 3% in U.S. trading Friday. Italian bonds were lower after a lackluster auction.

SPDR Dow Jones Euro Stoxx 50 ETF (NYSEArca: FEZ)


Tisha Guerrero contributed to this article.

Read the disclaimer; Tom Lydon is a board member of the funds for Rydex|SGI.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.