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European shares turn flat as ECB-led rally fades

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July 27, 2012, 12:47 p.m. | World — by Reuters

LONDON — European shares turned flat on Friday, as concerns resurfaced over political hurdles which could hinder any fresh stimulus measures from the European Central Bank (ECB) to fight the region's sovereign debt crisis.
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Reuters

LONDON — European shares turned flat on Friday, as concerns resurfaced over political hurdles which could hinder any fresh stimulus measures from the European Central Bank (ECB) to fight the region's sovereign debt crisis.

The FTSEurofirst 300 index at one stage slipped by 0.1 percent, before edging back to trade flat at 1,042.62 points.

The index had risen 2.4 percent on Thursday, as equity markets rallied after ECB President Mario Draghi pledged to take all necessary steps to protect the euro zone from collapse.

However, traders and investors had warned the rally could be short-lived, given that European policymakers have previously disagreed on the details of how to combat the region's sovereign debt crisis.

"Many economists believe the ECB's potential solution to be somewhat short term and may not provide a viable long term solution. This morning we saw a reminder of the challenge ahead with the release of Spanish unemployment showing a massive 24.6 percent, the highest on record," said Lee McDarby, head of dealing at Investec Corporate Treasury.

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