Euro crisis pummels stocks
- Published: 18 May 2012 at 17.48
- Online news:
World stock markets mostly fell on Friday and the euro hit another four-month low, slammed by a ratings downgrade for Greece and warnings for 16 Spanish banks, ahead of a crucial G8 meeting.
A stockbroker monitors market movements at BGC Partners in London. London's benchmark FTSE 100 index was down 0.96% to 5,286.83 points befopre the midday break, Frankfurt's DAX 30 lost 0.42% to 6,282.61 points and in Paris the CAC 40 shed 0.26% to 3,004.04.Madrid's IBEX-35 index was up 0.03% at 6,540.70 points and Bankia shares surged as the financial sector staged a dramatic recovery despite the downgrade news.However, the European single currency tumbled as low as $1.2642 to reach a level last seen on January 16. It later stood at $1.2687.Stocks in Asia were weak, and the Tokyo market ended with a fall of 2.99% on the Nikkei 225 index. Seoul plummeted 3.40% and Sydney shed 2.67%, suffering its biggest fall in eight months.On Wall Street, the Dow Jones Industrial Average fell 1.24% on Thursday.World leaders were to gather at Camp David ourside Washington DC later on Friday for a two-day summit with the focus on Greece amid concerns it could leave the eurozone. Such an exit could have wildly uncertain repercussions for the global economy."Fears that Greece could collapse at any moment, downgrades for Spanish banks, reports of runs on one or two banks in those countries.... It could well be a tough few days at the G8," said analyst Mike Mason at Sucden Financial Private Clients.Moody's slashed the ratings of 16 banks in Spain by between one and three notches, citing "renewed recession, the ongoing real-estate crisis and persistent high levels of unemployment". It also blamed the reduced creditworthiness of the government.Fitch meanwhile downgraded Greece's credit one notch, to CCC from B-, saying it was vulnerable to default amid political uncertainty over Athens's commitment to a crucial bailout plan and its possible exit from the eurozone.The run-up to the Group of Eight industrialised powers meeting has witnessed a marked deterioration in the euro zone's long-running debt crisis that has already resulted in massive bailouts for Greece, Ireland and Portugal, and now appears to be circling Spain."There is little respite in the eurozone banking crisis which is having spill-over effects on the global economy and global financial markets," added VTB Capital economist Neil MacKinnon."Investors are worried about deposit-runs in the eurozone banking system and the 'flight of capital' is pushing US, UK and German bond yields lower."Germany's 10-year borrowing rate fell to a record low level of...
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