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European stocks follow Asian downturn

Latest update : 2008-09-24

European stock markets fell sharply amid growing concern over Washington's massive bailout plan for the US financial system. At Tuesday's close, London's FTSE 100 was down 1,91% while the CAC 40 in Paris shed 1.98%.

European shares ended sharply lower for a second straight day as investors fretted about the fate of a $700 billion financial sector bailout plan that the United States is trying to push through Congress. 

The pan-European FTSEurofirst 300 index ended 1.5 percent lower at a provisional 1,109.93 points, adding to a 2.1 percent loss on Monday after a record surge on Friday when news of the plan emerged and several countries instituted short-selling bans.
 
Banks took most points off the index, with UBS falling 7.9 percent and Royal Bank of Scotland losing 5.9 percent.
 
Miners also fell sharply, tracking metal prices. Anglo American was the heaviest-weighted individual loser on the index, falling 8.2 percent, while Rio Tinto lost 5.1 percent. 

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson stressed to Congress the dire consequences of failing to move quickly on the plan for the government to buy up hundreds of billions of dollars of tainted mortgage-related securities.
 
"Paulson and Bernanke will do their utmost to get a sense of urgency into Congress, but this is particularly sensitive because of the election season and politicians will take all the room they can have to make populist changes," said Emiel van den Heiligenberg, head of asset allocation at Fortis Investments. 

"We would expect the plan to be accepted, perhaps in a slightly amended form, but stay cautious on markets because of the recession and the impact on earnings. That's something that needs more time to work itself out," he said.

Date created : 2008-09-23

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