Europe Tumbles on Weak Banks

Ivaylo
14 Mar, 2007
New York City

European markets plunged in morning trading Wednesday, with banking stocks such as Credit Suisse and Deutsche Bank suffering heavily, after concernss about the spread of subprime mortgage losses made US stock tumble in late trading overnight. European banks with a U.S. lending business also fell. The French CAC 40 index lost 1.7% at 5,343.22, the German DAX 30 index gave up 1.6% at 6,520.32 and the U.K. FTSE 100 index fell 1.3% at 6,081.20.

[R]6:30AM European markets fall in the wake of global market weakness.[/R]
European markets declined in early trade on Wednesday. The French CAC 40 index lost 1.7% at 5,343.22, the German DAX 30 index gave up 1.6% at 6,520.32 and the U.K. FTSE 100 index fell 1.3% at 6,081.20.

Advancers

Supermarket operator Carrefour was in focus, adding 2.7% as the only advancer on the main CAC 40 index after it was upgraded to overweight from equal-weight at Morgan Stanley. Stagecoach Group was another gainer, putting up 2% after it announced plans to return 700 million pounds, or $1.35 billion to shareholders and said its profit for the year will be at the top end of expectations.

Decliners

Banks providing lending facilities against a pool of mortgage loans were severely hit. Shares in Deutsche Bank dropped 3.4%, Credit Suisse lost 2.8% and UBS shed 2.4%. European banks with a U.S. lending business also fell. Shares in Royal Bank of Scotland Group which owns Citizens Financial Group, dropped 3.2% and BNP Paribas gave up 2.7%.

Insurers and fund managers were also hit, trading lower as the value of their investment portfolios was seen falling. France AXA stock fell 2.9% in Paris and shares in U.K. hedge fund manager Man Group dropped 4.5% in London.

Oil and gold

Crude oil was little changed before a report today that''s expected to show U.S. gasoline stockpiles fell for a fifth week as refineries shut for maintenance and repairs. Crude oil for April delivery rose 1 cent, or 0.02%, to $57.94 a barrel in electronic trading on the New York Mercantile Exchange, in early trade in London. Brent crude for April settlement fell 10 cents to $60.80 a barrel on the London-based ICE Futures exchange.

Gold fell to a one-week low on speculation slowing U.S. economic growth will stall demand for the precious metal as a hedge against inflation. Gold for immediate delivery declined $3.40, or 0.5 percent, to $640.40 an ounce at 10:48 a.m. London time.

Currencies

The euro dipped against the dollar on Wednesday on growing concern that loose lending practices in the United States could be felt worldwide. The euro bought $1.3190 in afternoon European trading, down nominally from $1.3196 in New York late Tuesday. The British pound fell to $1.9233 from $1.9303 as traders waited for that country latest unemployment information. The dollar also dropped to 116.10 Japanese yen from 116.52 yen.

[R]5:00AM Gold and silver declined on Tuesday on weak global stocks and softer oil.[/R]
April gold lost 90 cents to close at $649.40 a troy ounce on the New York Mercantile Exchange, while May silver lost 12.5 cents to $12.96. April platinum settled up $9.80 at $1,223.60 an ounce, while June palladium shed $2 to $354 an ounce. The most-active May copper contract declined 2.45 cents to settle at $2.8245 per pound.

April crude oil declined 98 cents to end at $57.93 a barrel. April gasoline settled up 2.13 cents at $1.9318 a gallon. April heating oil advanced 0.79 cent to finish at $1.6902 a gallon. April natural gas settled down 2.0 cents at $6.892 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures closed at four-month lows. The May contract closed down 0.75 cent at $1.1105 a pound, with July off 0.75 cent at $1.1395. Futures on raw sugar in foreign ports for May gained 0.03 cent to end at 10.39 cents a pound, with July up 0.03 cent at 10.31 cents.