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FRANKFURT, Oct 10 (Reuters) - European stocks dived by more than 7 percent
midday on Friday, swept up in a global panic sell-off as investors feared
governments' efforts to thaw credit markets would fail to ward off a global
recession.
Fragile banks and insurers were among the biggest fallers, as
discouraging news in the insurance sector worried investors of significantly
lowered earnings.
Miners, meanwhile, led the drop as the European basic resource sector
slumped 9.5 percent.
"The market is catching up with the grim reality that this isn't going to
be a mild downturn," said James Hamilton, bank analyst at Numis.
At 1122 GMT, the pan-European FTSEurofirst 300 index was down 7.24
percent at 854.64 points, after falling more than 9 percent in early trade and
hitting its lowest level since July 2003.
The index has fallen more than 21 percent so far this week and is on
track for its worst week on record, in a credit crisis that has frozen interbank
lending, hammered banks and slowed the global economy.
Insurers followed banks as some of the worst underperformers, under
pressure after the second largest U.S. insurer, Prudential Financial, warned on
quarterly profits on Thursday, sending its shares down by more than 23 percent.
This was followed by news on Friday that Japan's Yamato Life Insurance
Co, an unlisted midsized insurer, became the first Japanese financial
institution to collapse due to global market turmoil stemming from the subprime
crisis.
"The two events were a one-two punch on the insurance sector and this
was compounded by price target downgrades from several brokerages," said a
Frankfurt-based trader.
Allianz was 12.6 percent lower, leading the sector lower, while Axa was
down 12 percent and the world's second-largest reinsurer Munich Re shed 11.6
percent.
General Electric, a bellwether for the U.S. economy, posted a profit drop
in line with its recently cut forecast.
DEFENSIVE STOCKS SLIDE
Oil shares tumbled, with BP and Royal Dutch Shell down 5.7 and 7 percent
respectively as crude fell 4.5 percent.
Lower crude prices also hurt utilities, with RWE down 10 percent, E.ON
off 11 percent and EDF nearly 6 percent lower.
"Easing oil prices mean that utilities can't turn to more expensive
alternative energy methods to add to their mixture -- this is particularly hard
on companies like E.ON," said an analyst.
GDF Suez shares dropped 5 percent, extending Thursday's 13 percent fall
after Belgian energy minister Paul Magnette told Le Soir newspaper of plans to
cap electricity prices at subsidiary Electrabel.
Pharmaceutical stocks, usually seen as defensive, were not spared --
AstraZeneca was down 5 percent, GlaxoSmithKline off 6 percent and Novartis down
6.7 percent.
Heavyweight telecoms stock Vodafone dropped 7 percent.
Miners took a whipping as copper plunged 9 percent, with Rio Tinto
slumping 12 percent, BHP Billiton down nearly 10 percent and Anglo American
losing 8.2 percent.
G7 MEETING EYED
Finance chiefs from the Group of Seven rich nations meet in Washington
later on Friday to discuss how to stem the crisis.
"Markets will remain under severe pressure until we see further decisive
and coordinated actions from global authorities. In that sense, this weekend's
meeting of the G7 finance ministers could be of truly monumental importance,"
said Paul Niven, head of asset allocation at F&C Asset Management.
"It is likely that we are a short period of time from seeing much of the
required, coordinated steps from authorities which are needed to tackle the
crisis. It is clear that the interdependence of economies and markets is such
that unilateral responses, which we have mainly seen to date, are simply not
sufficient."
Britain's FTSE 100 lost 7 percent, France's CAC lost 8.1 percent and
Germany's DAX shed 9.2 percent.
The major national indexes fell as much as 10 percent earlier.
(Additional reporting by Rebekah Curtis in London) Keywords: MARKETS EUROPE
STOCKS
tf.TFN-Europe_newsdesk@thomsonreuters.com
cmr
COPYRIGHT
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content,
including by framing or similar means, is expressly prohibited without the prior
written consent of Thomson Financial News.
midday on Friday, swept up in a global panic sell-off as investors feared
governments' efforts to thaw credit markets would fail to ward off a global
recession.
Fragile banks and insurers were among the biggest fallers, as
discouraging news in the insurance sector worried investors of significantly
lowered earnings.
Miners, meanwhile, led the drop as the European basic resource sector
slumped 9.5 percent.
"The market is catching up with the grim reality that this isn't going to
be a mild downturn," said James Hamilton, bank analyst at Numis.
At 1122 GMT, the pan-European FTSEurofirst 300 index was down 7.24
percent at 854.64 points, after falling more than 9 percent in early trade and
hitting its lowest level since July 2003.
The index has fallen more than 21 percent so far this week and is on
track for its worst week on record, in a credit crisis that has frozen interbank
lending, hammered banks and slowed the global economy.
Insurers followed banks as some of the worst underperformers, under
pressure after the second largest U.S. insurer, Prudential Financial, warned on
quarterly profits on Thursday, sending its shares down by more than 23 percent.
This was followed by news on Friday that Japan's Yamato Life Insurance
Co, an unlisted midsized insurer, became the first Japanese financial
institution to collapse due to global market turmoil stemming from the subprime
crisis.
"The two events were a one-two punch on the insurance sector and this
was compounded by price target downgrades from several brokerages," said a
Frankfurt-based trader.
Allianz was 12.6 percent lower, leading the sector lower, while Axa was
down 12 percent and the world's second-largest reinsurer Munich Re shed 11.6
percent.
General Electric, a bellwether for the U.S. economy, posted a profit drop
in line with its recently cut forecast.
DEFENSIVE STOCKS SLIDE
Oil shares tumbled, with BP and Royal Dutch Shell down 5.7 and 7 percent
respectively as crude fell 4.5 percent.
Lower crude prices also hurt utilities, with RWE down 10 percent, E.ON
off 11 percent and EDF nearly 6 percent lower.
"Easing oil prices mean that utilities can't turn to more expensive
alternative energy methods to add to their mixture -- this is particularly hard
on companies like E.ON," said an analyst.
GDF Suez shares dropped 5 percent, extending Thursday's 13 percent fall
after Belgian energy minister Paul Magnette told Le Soir newspaper of plans to
cap electricity prices at subsidiary Electrabel.
Pharmaceutical stocks, usually seen as defensive, were not spared --
AstraZeneca was down 5 percent, GlaxoSmithKline off 6 percent and Novartis down
6.7 percent.
Heavyweight telecoms stock Vodafone dropped 7 percent.
Miners took a whipping as copper plunged 9 percent, with Rio Tinto
slumping 12 percent, BHP Billiton down nearly 10 percent and Anglo American
losing 8.2 percent.
G7 MEETING EYED
Finance chiefs from the Group of Seven rich nations meet in Washington
later on Friday to discuss how to stem the crisis.
"Markets will remain under severe pressure until we see further decisive
and coordinated actions from global authorities. In that sense, this weekend's
meeting of the G7 finance ministers could be of truly monumental importance,"
said Paul Niven, head of asset allocation at F&C Asset Management.
"It is likely that we are a short period of time from seeing much of the
required, coordinated steps from authorities which are needed to tackle the
crisis. It is clear that the interdependence of economies and markets is such
that unilateral responses, which we have mainly seen to date, are simply not
sufficient."
Britain's FTSE 100 lost 7 percent, France's CAC lost 8.1 percent and
Germany's DAX shed 9.2 percent.
The major national indexes fell as much as 10 percent earlier.
(Additional reporting by Rebekah Curtis in London) Keywords: MARKETS EUROPE
STOCKS
tf.TFN-Europe_newsdesk@thomsonreuters.com
cmr
COPYRIGHT
Copyright Thomson Financial News Limited 2008. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content,
including by framing or similar means, is expressly prohibited without the prior
written consent of Thomson Financial News.
Read the news article:http://www.advfn.com/news_Europe-shares-down-7-pct-in-global-plunge-G7-eyed_28643894.html
