ECB chief economist Stark resigns
The chief economist of the European Central Bank (ECB), Juergen Stark, resigned Friday, throwing financial markets into a spin, DPA reports.
Stark is a German and a hawk in the bank's governing council in the fight against inflation.
An announcement from the Frankfurt-based ECB said Stark had told the bank's president, Jean-Claude Trichet, that he was leaving "for personal reasons."
His appointment was meant to last until the end of May 2014. Stark will remain at his post until a successor is appointed by the end of this year, the bank said. Stark joined the council in June 2006.
Trichet thanked him for "his outstanding contribution to European unity over many years" and his "exceptional and unwavering dedication as a member of the executive board and governing council," the statement said.
Rumours that Stark, seen as a guarantor of tight money policies, might be stepping down swept through financial markets early Friday, triggering a sharp fall in Frankfurt's DAX stock index.
Only a day earlier, the ECB council had altered its monetary policy to cater to growing fears of an economic downturn, putting off its plans to raise euro interest rates to check inflation.
The DAX was trading 3.2 per cent lower for the day at 5,234 as the news of Stark's departure spread.
The euro also slumped sharply on the news, heading towards 1.37 dollars. Italian and Spanish bonds slumped and German bunds gained sharply in value.