European Indexes Plunge; Germany Shuts Down 7 Nuclear Plants

Arthi Gupta
15 Mar, 2011
New York City

Markets in Germany plunged 5% at the opening and in Europe dropped more than 3% after Japan suffered its second worst one-day decline in 24 years. The IMF approved

[R]2:00 PM Frankfurt – Markets in Germany plunged 5% at the opening and in Europe dropped more than 3% after Japan suffered its second worst one-day decline in 24 years. The IMF approved €4.1 billion disbursement to Greece. BMW, Renault, and Scor slumped.[/R]

European markets opened sharply lower after the benchmark index in Japan suffered its second worst one-day loss in 24 years. The nuclear leak sparked fallout in the index routed the markets in Asia and commodities markets.

German Chancellor Angela Merkel announced the shutdown of seven ageing nuclear reactors for three months for a safety review. Germany has 17 nuclear power plants. The shutdown applies to all seven reactors that are in operation since the 1980s.

The nuclear power is highly unpopular in Germany and on Monday 100,000 people took to the streets.

In addition, markets also focused on the rising tensions in the Middle East and in North Africa after the opposition party in Bahrain denounced the arrival of Saudi army.

Today, finance ministers from the member states of European Union are set to meet in Brussels. At the same time, a G8 foreign ministers meet in Paris is likely to formalize a move on the violence in Libya.

Fears of a major nuclear catastrophe in Japan grew after a third explosion at the Fukushima Dai-ichi plant sparked more radiation leaks and a warning from the prime minister over further possible contamination.

""The danger of further radiation leaks is increasing”, Naoto Kan, Japanese Prime Minister, said in a televised news conference. ""There is still a very high risk of more radiation coming out,"" he added, while ordering anyone within the current 12 mile exclusion to leave.

Those living between 20 kilometers and 30 kilometers were also said to be at risk and told to stay indoors and keep windows and doors shut.

A no-fly zone has been set up around the Fukushima plant to stop the radiation spreading.

Tokyo''s Nikkei dropped as much as 14% at one point in the afternoon before paring losses and ending down 10.55%. The index decline was the second worst since the fall of 14.5% in October 1987.

In Paris CAC-40 index plunged 136.04 or 3.51% to 3,742.00 and in Frankfurt DAX index edged lower 273.28 or 3.98% to 6,593.35.

IMF Approves Disbursement to Greece

The International Monetary Fund on Monday approved the immediate disbursement of €4.1 billion to Greece under the IMF/European Union bailout program. Thus, total IMF disbursements amounted to about €14.6 billion.

The lender said Athens made further progress toward its key objectives of putting the economy on a path of sustainable growth by boosting competitiveness, strengthening financial stability, and securing sustainable public finances.

Gainers & Losers

BG Group plc plunged 5.09% to 1,437.00 pence after the natural-gas producer said it would invest up to $30 billion in Brazil over the next decade, as part of its plans to produce more than half a million barrels of oil and natural gas equivalent in the country.

BMW AG slumped 4.64% to €53.21 despite the German car manufacturer said for 2011 sales volume is expected to rise above 1.5 million units, with all its three brands comprising BMW, MINI and Rolls-Royce brands achieving new sales volume records.

Debenhams Plc gained 1.87% to 59.80 pence after the department store group reported that group like-for-like sales for the first-half ended February 26 declined 1.5% excluding VAT, but were flat including the tax.

Deutsche Bank plunged 4.67% to €40.63 after the global investment bank reiterated 2011 profits guidance of €10 billion at the pre-tax level.

Novartis AG dropped 1.15% to $54.20 after the Swiss drug maker and Incyte Corp. said that the second Phase III study of Janus kinase, or JAK, inhibitor INC424 (ruxolitinib) met primary endpoint of significantly reducing spleen size in patients with myelofibrosis, an uncommon form of blood cancer.

Renault SA declined 3.55% to €36.82 after the French car-maker apologized to the three executives it had sacked earlier this year over allegations of leaking electric car technology after investigators reportedly failed to unearth evidence linking them to the spying claims.

Scor SE dropped 3.43% to €18.59 after the reinsurer said its pre-tax losses from the earthquake and tsunami that devastated northeast Japan will be below €185 million in the worst-case scenario.

UBS AG dipped 0.05% to $18.58 after the Swiss banking giant paid 29% less in total compensation for its investment-banking head Carsten Kengeter in 2010 as the unit''s earnings slumped in the second-half of the year.