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Europe shares fall 5 pct on world recession fears
Thu, 16th Oct 2008 18:07
LONDON, Oct 16 (Reuters) - European shares slid 5 percent on Thursday, with banks taking a whipping as the world economy faced recession in the worst financial crisis since the Great Depression and oil stocks tracked tumbling crude prices.
The FTSEurofirst 300 index of top European shares ended down 5 percent at 858.41 points, adding to a 6.5 percent fall the day before.
European stocks have fallen more than 40 percent in the year to date, hammered by a credit crisis that has sparked major losses at banks, frozen interbank lending and slowed the economy.
Banks were the day's heaviest losers, with Fortis plunging more than 26 percent. HSBC shed 4 percent, Santander ended down 6.5 percent and BNP Paribas lost 7 percent.
The VIX volatility index -- a gauge of stock market fear -- shot to record highs of more than 80 percent in late trade as investors fled from risky equities.
U.S. stocks fell as signs of regional weakness in manufacturing and poor corporate results fuelled fears of recession. A day earlier, the S&P 500 index suffered its worst tumble since the 1987 stock market crash.
RECESSION FEARS
The world's richest nations are now in or close to recession and further interest rate cuts are needed to stem off more fallout from the financial crisis, Reuters polls of economists showed on Thursday.
'Recession is very much on the cards,' said Mike Lenhoff, chief strategist at Brewin Dolphin in London. 'What the central banks will have to do is bite the bullet and bring interest rates down.'
Across Europe, Britain's FTSE 100 lost 5.4 percent, Germany's DAX shed 4.9 percent and France's CAC-40 ended 5.9 percent lower. Japan's Nikkei posted its worst one-day losses since the stock market crash of 1987.
'This is almost the final leg before people capitulate. The sooner we get to that the better,' said Justin Urquhart Stewart, director at Seven Investment Management.
Governments around the world have pledged $3.2 trillion in emergency measures, including taking stakes in banks to help them stabilize.
U.S. and European Union leaders agreed on Thursday to meet at the weekend to prepare for a global summit to overhaul the world's financial system.
French President Nicholas Sarkozy, currently representing the EU on the world stage, said at an EU summit in Brussels he would meet U.S. President George W. Bush on Saturday.
Central banks renewed efforts to free up liquidity and unblock frozen lending, with further action from Switzerland, Britain and the European Central Bank.
Switzerland's top two banks took emergency measures to shore up their finances on Thursday, with the state taking
a near 10 percent stake in UBS while Credit Suisse raised new funds from private investors. UBS ended down 4.9 percent and Credit Suisse lost 0.9 percent.
RBS said financial sector rescue packages put together by governments and central banks would serve as a shock absorber but were unlikely to prevent most euro-area economies from falling into recession next year.
In the energy sector, Royal Dutch Shell lost 7.2 percent and Total ended down more than 9 percent as crude slide to below $70 a barrel as European trading drew to a close.
(Additional reporting by Brian Gorman; Editing by Quentin Bryar) Keywords: MARKETS EUROPE STOCKS
tf.TFN-Europe_newsdesk@thomson.com
ra
COPYRIGHT
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The FTSEurofirst 300 index of top European shares ended down 5 percent at 858.41 points, adding to a 6.5 percent fall the day before.
European stocks have fallen more than 40 percent in the year to date, hammered by a credit crisis that has sparked major losses at banks, frozen interbank lending and slowed the economy.
Banks were the day's heaviest losers, with Fortis plunging more than 26 percent. HSBC shed 4 percent, Santander ended down 6.5 percent and BNP Paribas lost 7 percent.
The VIX volatility index -- a gauge of stock market fear -- shot to record highs of more than 80 percent in late trade as investors fled from risky equities.
U.S. stocks fell as signs of regional weakness in manufacturing and poor corporate results fuelled fears of recession. A day earlier, the S&P 500 index suffered its worst tumble since the 1987 stock market crash.
RECESSION FEARS
The world's richest nations are now in or close to recession and further interest rate cuts are needed to stem off more fallout from the financial crisis, Reuters polls of economists showed on Thursday.
'Recession is very much on the cards,' said Mike Lenhoff, chief strategist at Brewin Dolphin in London. 'What the central banks will have to do is bite the bullet and bring interest rates down.'
Across Europe, Britain's FTSE 100 lost 5.4 percent, Germany's DAX shed 4.9 percent and France's CAC-40 ended 5.9 percent lower. Japan's Nikkei posted its worst one-day losses since the stock market crash of 1987.
'This is almost the final leg before people capitulate. The sooner we get to that the better,' said Justin Urquhart Stewart, director at Seven Investment Management.
Governments around the world have pledged $3.2 trillion in emergency measures, including taking stakes in banks to help them stabilize.
U.S. and European Union leaders agreed on Thursday to meet at the weekend to prepare for a global summit to overhaul the world's financial system.
French President Nicholas Sarkozy, currently representing the EU on the world stage, said at an EU summit in Brussels he would meet U.S. President George W. Bush on Saturday.
Central banks renewed efforts to free up liquidity and unblock frozen lending, with further action from Switzerland, Britain and the European Central Bank.
Switzerland's top two banks took emergency measures to shore up their finances on Thursday, with the state taking
RBS said financial sector rescue packages put together by governments and central banks would serve as a shock absorber but were unlikely to prevent most euro-area economies from falling into recession next year.
In the energy sector, Royal Dutch Shell lost 7.2 percent and Total ended down more than 9 percent as crude slide to below $70 a barrel as European trading drew to a close.
(Additional reporting by Brian Gorman; Editing by Quentin Bryar) Keywords: MARKETS EUROPE STOCKS
tf.TFN-Europe_newsdesk@thomson.com
ra
COPYRIGHT
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
