European Markets Drop; Automakers Fall

123jump.com Staff
22 Sep, 2008
New York City

European markets in the region fell between 1.6% and 2%. Regulators in the region followed the U.S. initiative to ban short selling in financial stocks till the end of the year. Crude oil and metals prices increased and German auto companies fell. Banks in Ireland declined on ratings downgrade.

1:45PM New York – 7:45 PM Frankfurt – European markets edged lower after crude oil price and metal prices increased.[/R]

European markets in the region fell between 1.6% and 2% after a week of tumultuous trading. The benchmark index CAC 40 in Paris led the decliners in the region with a loss of 2.4% followed by declines of 2% in Zurich and Madrid, of 1.8% in Stockholm and 1.6% in Milan.

Regulators in the region joined the U.S. led initiative to curb short selling in financial stocks, at least temporarily. Germany, France, Holland and Belgium banned short selling in local banks and financial institutions at least till the end of the year. Germany imposed a ban on short selling in Deutsche Bank and Commerzbank AG and Belgian regulators extended ban on Fortis, Societe Generale, Natixis and Credit Agricole SA.

Crude oil futures rose sharply after the dollar weakened and metals rose. Crude oil rose 5% or $5.22 to $109. 77 after dollar edged lower and gold and silver surged.

European Stock Movers

Holcim dropped after the surging on the hopes that the Russian cement company Eurocement will increase its recently acquired 6.5% stake to a full-blown takeover. The possibility of a takeover of the largest cement company in Europe was discredited after Eurocement said that its stake is a long-term investment.

Wolseley Plc surged 14% or 56 pence to 470 pence after it expressed confidence that it has enough capital and does not need to renegotiate its bank loans and sell shares. The UK based company distributes heating and plumbing and building materials supplies and its stock has dropped more than 40% on the concern that it may need more capital to sustain its business. The company reported for the year ended in July 2008, revenue rise of 2% to 16.56 billion pounds and earnings decline of 77% to 145 million pounds or 56.58 pence a share. The company carries 2.45 billion pounds in debt.

Bank of Ireland plc dropped 4.69 euros after a U.S. based rating agency lowered its rating on deposit ratings and long term out look to negative. The downgrade dragged other banks in Dublin trading.

German auto and tire companies declined after the rise in oil futures. Continental AG dropped 2% or 1.26 euros to 69.74 after a German trade magazine cited 42% decline in winter tires deliveries for the year compared to a year ago. BMW AG fell 3.7% or 1.14 euros to 29.78 euros.

Deutchse Bank fell 1.94 euros or 3.4% to 55.56 euros after it sold 40 million shares at 55 euros to pay for its stake purchase in Deutshce Postbank AG.

Hochtief AG, the largest German construction company plunged 8.7% or 3.81 euros to 40.19 euros. Bloomberg news reported that a rival Hungarian airport plans to lure away discount airlines.

Norddeutsche Affinerie AG surged 8.6% or 2.6 euros to 33.06 as commodities prices gained. Salzgitter AG increased its stake in the copper smelting company to 17.6% from 10.8%.