European Markets Fall, BASF Shuts 80 Plants

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

European markets fell across the region on job cuts, bank profit worries and weak earnings environment. Market indexes dropped more than 1% in the early afternoon after ECB President Jean-Claude Trichet said that global financial system is under severe stress in 65 years.

[R]8:20AM New York – European Markets fall on earning worries in the banking sector.[/R]

European markets fell across the region on job cuts, bank profit worries and weak earnings environment.

Market indexes dropped more than 1% in the early afternoon after ECB President Jean-Claude Trichet said in a television interview that global financial system is in the most severe stress since the World War II. The U.S. Fed Chairman Bernanke in a testimony to the U.S. Senate Banking Committee that there is no risk to ‘U.S. credit rating’ despite the sharp increase in lending by the central bank.

BASF SE, the Germany based largest chemical company in the world fell as low as 15% to 21.71 euros after it withdrew its profit target and close 80 plants and cut production at additional 100 plants. The action will affect 20,000 workers around the world.

“We already drew attention to the difficult economic situation at the end of October. Since then, customer demand in key markets has declined significantly,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of the company.

He further added, “In particular, customers in the automotive industry have canceled orders at short notice.”

Banks in Europe fall after analysts downgrade earnings prospects and predict higher losses. Morgan Stanley lowered UBS AG earning in 2009 to Sfr 1.41 from Sfr 1.83 and estimated net outflow of assets in its wealth management unit by Sfr 77 billion or $65 billion.

This week Boston based Putnam, a division of Canada based Wesco Life fired 12 money managers and saw the net asssets decline nearly 40% to $110 billion.

ING Groep NV and HSBC dropped more than 5%. West LB downgraded HSBC Holdings Plc to “Sell” as its core capital required for Tier 1 capital ratio fell below its average. ING dropped 9% to 6.50 euros after Goldman Sachs lowered its price target by 35%.

Miners in UK trading fell after on the global economic slowdown worries. In Australian and in UK trading BHP Billiton and Rio Tinto dropped more than 3.5%. Gold fell for the second day and is likely to test $700 an ounce price in short term.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 55.19 or 0.66% to 8,273.22, Hang Seng index in Hong Kong decreased 100.09 or 0.77% closed to 12,815.80 CSI 300 index in China higher 113.34 or 6.16% closed to 1,953.16. ASX 200 index in Australia decreased 23.60 or 0.67% to close 3,499.60. The KL Composite index in Malaysia lower 5.44 or 0.62% closed to 877.65.

The Kospi Index in South Korea decreased 19.34 or 1.87% to close at 1,016.82. SET index in Thailand closed lower 11.46 or 2.73% to 408.51 and JSE Index in Indonesia decreased 9.50 or 0.80% to 1,180.36. The Sensex index in India decreased 163.42 or 1.83% closed to 8,773.78.

Europe Markets Review

In London FTSE 100 Index traded lower 61.22 or 1.45% to 4,147.33, in Paris CAC 40 Index decreased 44.13 or 1.37% to 3,173.27 and in Frankfurt DAX index traded lower 44.95 or 0.98% to 4,534.52. In Zurich trading SMI decreased 49.36 or 0.87% to 5,626.22.