Wednesday January 14, 12:19 PM
European stocks slide as German recession worsens
LONDON (AFP) - European stock markets fell further on Wednesday, wiping out gains won so far this year, on weakness in the banking sector caused by concern about HSBC (LSE: HSBA.L - news) .
In late morning trading, London's FTSE 100 index of leading shares was down 1.65 percent at 4,326.53 points.
Frankfurt's DAX 30 (Xetra: news) sank 1.42 percent to 4,571.12 points and in Paris the CAC 40 (Paris: news) dropped 1.17 percent to 3,160.32 points.
The DJ Euro Stoxx 50 index of leading eurozone shares retreated 1.52 percent to 2,379.57 points.
"The Banks are the biggest drag on the FTSE this morning with the sector as a whole down over six percent and HSBC suffering in particular," said Joshua Raymond, Market Strategist at City Index.
"Morgan Stanley (NYSE: MS - news) analysts have reported that the bank may have to raise an additional 30 billion dollars and halve their dividend.
Shares in the group fell 8.32 percent to 586.75 pence, dragging down Barclays (LSE: BARC.L - news) by 6.99 percent to 154.30 pence), HBOS (LSE: HBOS.L - news) by 2.84 percent to 78.70 pence, and Lloyds TSB by 2.03 percent to 130.30 pence.
Official data showed Wednesday that the German economy shrank by 1.5-2.0 percent in the fourth quarter, as the financial crisis and strong euro plunged Europe's powerhouse deeper into recession.
The contraction, which compared with the third quarter, was in line with suggestions from officials in recent weeks but underlined the problems facing Europe's biggest economy and the world's leading exporter.
The German economy contracted in the second and third quarters.
Frankfurt took another blow as Deutsche Bank (Xetra: 514000 - news) , the biggest German bank, said Wednesday that it expected a 2008 net loss of around 3.9 billion euros (5.2 billion dollars).
In the fourth quarter, the net loss was around 4.8 billion euros, a statement said.
In reaction, Deutsche Bank saw its share price tumble 6.14 percent to 22.78 euros.
The European single currency stood at 1.3227 dollars, on the eve of a widely-expected interest rate cut as the European Central Bank also battles recession in the eurozone.
All three main European stock markets have now erased their 2009 gains, as investors fret over the ongoing impact of the global financial crisis on economic growth and company earnings.
World (WRGR.TA - news) stocks sank Tuesday after more bad US economic data as fears grew that upcoming corporate results will be decimated in the credit crunch.
"Well, 2009's rally was brief!" said Capital Spreads director Simon Denham in London on Wednesday.
"We're now back where we started the year after a great deal of hype was built up by many saying that we'd see a strong start by equity prices in the New Year.
"It's back to reality with a bump I'm afraid and whilst we did start 2009 will bullish intentions it didn't take long for the market to give up its gains."
In Asia on Wednesday, Japanese share prices ended 0.29 percent higher, lifted by bargain hunting after the previous day's sharp fall, dealers said.
Hong Kong shares closed 0.3 percent higher on Wednesday, following a rebound in Chinese banks and energy companies, dealers said.
Wall Street had ended mixed on Tuesday in choppy trade as investors worried about the weak global economy and a poor start to the corporate earnings season.
The Dow Jones Industrial Average fell 0.30 percent to close at 8,448.56, extending a losing streak to a fifth session. US markets reopen at 1430 GMT.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
