European Markets Fall 4%, Russia Plunges 11%

123jump.com Staff
11 Nov, 2008
New York City

European markets fell more than 4% on the weak profit outlook. Mining and metals companies declined after crude oil and metals prices fell. Banks and insurance companies fell after weak earnings from Intesa Saopaolo SpA. Vodafone Group rose on 17% rise in sales. Russia plunged 11%.

[R]3:40PM New York, 9:40 PM Frankfurt – European markets fell on the weak profit outlook and a decline in banking and mining stocks.[/R]

European market indexes declined between 4% and 6% after commodities, miners and financial stocks fell. Insurance companies fell on the worries that recent market declines ma force them to raise additional capital.

Commodities related stocks fell after a decline in crude oil and metal prices. Crude oil prices fell $% below $60 a barrel and copper fell in London trading.

Allianz SE declined 6% to 61.55 euros, Swiss Life Holding dropped 8% Sfr 109 and Axa dropped 5.7% to €15.40, ING declined 4% to €8.26 and Aegon fell 6% to €4.07.

Erste Bank, the largest bank in Austria is planning to raise 2.7 billion euros through the sale of participation certificates to the government. The sale will increase its Tier-1 ratio to 10% from 7.5% and it agreed to offer 6 billion of euros to retail and commercial clients over the next three years.

Intesa Sanpaolo SpA third quarter profit declined 54% to 673 million euros and dropped its dividend.

Vodafone Group Plc the global telecommunication carrier said first-half sales climbed 17% to £19.9 billion. Net profit in the period fell 35% to £2.14 billion or 4.02 pence per diluted share compared to net profit of £3.29 billion or 6.19 pence per share, a year earlier.

RWE AG, a management company of the RWE Group said third quarter revenues increased 14% to €34.5 billion from €30.3 billion a year earlier. Net profit in the quarter decreased 22% to €2.2 billion compared to net profit of €2.8 billion, a year earlier.

Aareal Bank AG, an international real estate bank based in Wiesbaden, Germany said third quarter revenues increased 17% to €117 million from £100 million a year earlier. Net profit in the quarter decreased 92% to €15 million compared to net profit of €183 million, a year earlier.

European Markets Fall

In London FTSE 100 Index closed lower 157.23 or 3.57% to 4,246.69, in Paris CAC 40 Index decreased 169.34 or 4.83% to close at 3,336.41 and in Frankfurt DAX index lower 263.95 or 5.25% to close at 4,761.58. In Zurich trading SMI decreased 209.83 or 3.45% to close at 5,880.79.

Russia Plunges

Russian market plunged on the worries that ruble may decline sharply. The RTS Index plunged 10.7% to 725.90 after comments from the central bank. Net capital outflow from Russia reached $50 billion in October adding more pressure on ruble. Micex Index declined 13% to 647.50 at the end of the day and exchange halted trading for today and tomorrow and on trading on RTS was suspended at 12:35 p.m. Moscow time for one hour.

In Moscow trading, Luk Oil dropped 11%, Gazprom declined 15% and Rosneft fell 15.2%. Sberbank, the largest Russian bank that holds ruble deposits dropped 16%.

Ruble in Moscow trading rose fell 1% to 30.70 to a dollar after Bank Rossii, th Russian central bank increased the trading band against the dollar and euro to 30 kopeks.

Russia has used $100 billion of its international currency reserve to fight the slide in ruble in the last two months. Russia still holds close to $480 billion in reserves, the third largest after China and Japan.