NaAtMaD – News and Articles that Make a Difference

News, Articles, Announcements, Reports related to Indian Economics and Corporate World

European shares slip on AIG woes; Fed, Goldman eyed

Posted by Manish Agrawal on Tuesday, 16 September, 2008

LONDON: European shares fell on Tuesday as global equities continued their slide amid turmoil in the financial sector, which led losers after a debt downgrade for American International Group.

The FTSEurofirst index of leading European shares was down 1.2 percent at 1,106.09 points, following a 3.6 percent slide on Monday after Lehman Brothers filed for bankruptcy protection. The index has fallen about 27 percent this year.

The DJ Stoxx European insurer index fell 2.7 percent, led by a 9.7 percent tumble in Swiss Re. Allianz, AXA Prudential and Aviva fell between 3.1 and 3.8 percent.

Underlining the unease among investors in financial stocks, the DJ Stoxx European banks index slid 3.5 percent. HBOS slid 11.3 percent, UBS fell 9.6 percent and Natixis lost 8.1 percent.

“There’s a smell of cordite in the air. It’s like the day after the explosion. People are still extremely nervous. They’re wondering what happens next,” said Justin Urquhart Stewart, investment director at Seven Investment Management.

“Investors are looking at what other companies have weak balance sheets. Now we need a bit of leadership from the central banks and the regulators,” he said.

Oil shares fell after another drop in the price of crude, now trading below $93 a barrel.

BP, Total and ENI were between 1.6 and 2.5 percent lower. Miners also suffered, as copper and gold prices fell. Anglo American, Rio Tinto and BHP Billiton dropped between 3.7 and 4.5 percent.

Airlines gained from a $2.8 per barrel fall in the crude price, with British Airways up 3.1 percent and Lufthansa up 2.4 percent.

Recruiter Adecco was 1.5 percent higher after saying it would not go ahead with a bid for UK rival Michael Page, which was down 28.8 percent.

Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 were down between 1.5 and 2.2 percent.

Shares pared losses after Germany’s ZEW economic sentiment index indicator came in stronger than expected.

FED, GOLDMAN WATCHED The U.S. Federal Reserve announces its rate decision at 1815 GMT. Fed fund futures point to an 86 percent chance of a 25-basis point rate cut.

“Expectations of a rate cut have increased dramatically in the last few days, with most people now expecting a cut, though we still think rates will be held,” said Henk Potts, strategist at Barclays Stockbrokers.

“If rates are cut, you could argue both ways. The optimists will say it shows the Fed will use every weapon in their armoury to help the markets. The pessimists will say it shows desperation, and it’s a sign of how weak the economy is.”

Source :


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: