Global shares plummet on banking fears

LONDON - Global stocks suffered heavy losses yesterday, falling further into 'bear market' territory on fresh fears over the health of the banking sector as the credit crunch bites deeper on economic growth.



By (AFP)

Published: Thu 10 Jul 2008, 12:18 AM

Last updated: Sun 5 Apr 2015, 12:48 PM

Dealers said concerns about the US banks in particular unsettled investors, setting up Asia and Europe for a bad day to leave most exchanges down 20 per cent or more from last highs in 2007 - the definition of a 'bear market.’

Lehman warned that the big US mortgage re-financing groups, Freddie Mac and Fannie Mae, could have to raise a combined $75 billion(48 billion euros) in fresh cash to meet their commitments.

In Europe on Tuesday, London’s FTSE 100 index was down 1.98 per cent at 5,403.80 points and Frankfurt’s DAX 30 shed 1.99 per cent to 6,268.78. In Paris, the CAC 40 index was down 1.75 per cent to 4,266.80 points after striking its lowest reading since July 2005 - at 4,224 points - in morning deals.

French banking shares were under heavy pressure, with declines of 3.09 per cent at Societe Generale, 3.25 per cent at BNP Paribas and 4.18 per cent at Credit Agricole.

The Dow Jones Industrial Average on Monday dipped 0.50 per cent to close at 11,231.96 points following a late recovery. “Everyone is reassessing the widely-held view that the worst of the credit crisis would be over by now and coming to the same conclusion - the worst may not be over and it might last well into 2009,” said Ed Yardeni of Yardeni Research. Japanese shares closed 2.45 per cent lower yesterday after briefly falling below 13,000 for the first time in nearly three months. Hong Kong lost 3.16 per cent and Sydney fell 1.4 per cent.

Meanwhile, eight of the world’s most powerful leaders called yesterday for efforts to cool sizzling commodity prices, warning that soaring fuel and food costs were a threat to world economic growth. The Group of Eight rich nations said it was ready to take action to cushion global growth from runaway commodity costs. But they stopped short of announcing concrete steps in a joint statement on the economy released on the second day of a summit in northern Japan. G-8 powers - Britain, Canada, France, Germany, Italy, Japan, Russia and the United States - said they remained positive about the long-term resilience of their economies, noting that emerging economies were still growing strongly.

The statement made no mention of the weakness of the US currency, although US President George W. Bush told fellow G-8 leaders that he was committed to “a strong dollar.”


More news from Business
In-store shopping regains trust

Business

In-store shopping regains trust

What is happening now is that as Covid-19 cases continue to decline, residents are regaining confidence in in-store shopping. This is according to a Kearney study in which UAE respondents cite convenience (51 per cent), enhanced shopping experience (49 per cent) and competitive pricing (44 per cent) as the main motivators driving them back to brick and mortar stores

Business3 days ago