Don't miss

Replay


LATEST SHOWS

EYE ON AFRICA

Tunisia's Parliament votes on new Government

Read more

MEDIAWATCH

French court rules #burkini ban "clearly illegal"

Read more

THE WORLD THIS WEEK

Biden in Turkey, Colombia Peace Deal, Ethiopia Olympic Protest (part 2)

Read more

THE WORLD THIS WEEK

Earthquake in Italy, French Burkini Ruling (part 1)

Read more

FRANCE IN FOCUS

The hidden secrets of Les Invalides

Read more

FOCUS

Pro-Opposition stronghold Port-Gentil feverishly awaits presidential elections

Read more

ENCORE!

Alexis Michalik: treading the boards in the footsteps of 'Edmond'

Read more

REPORTERS

Getting away with murder in DR Congo

Read more

IN THE PAPERS

'Why does Italy refuse to see the seismic risk?'

Read more

US recession weighs on Asian, European stocks

Latest update : 2008-12-02

European shares kept up the previous session's downard trend as London, Frankfurt and Paris each shed around 1% in morning trade. Earlier, Asian stocks closed down more than 5%, dragged down by news of a recession in the US.

European shares fell early on Tuesday, led by banks and commodity shares, and adding to the previous session's slump as nervous investors digested news of more global central bank action to rescue weakening economies.

 

At 0855 GMT, the FTSEurofirst 300 index index of top European shares was down 1.2 percent at 800.21 points, extending Monday's 6 percent fall.

 

Banks and oils took the most points off the index on Tuesday.
 

HSBC was the top-weighted loser, falling 2.8 percent, while Banco Santander lost 1.7 percent and BNP Paribas fell 3.4 percent.

 

Oil fell nearly 3 percent to trade below $48 a barrel, sending shares in BP down 1.2 percent, BG down 3.8 percent and Total down 1.4 percent.

 
Analysts said tough times lay ahead.

 

"Equities will have a rough ride at the start of December, and this will continue until we see a ray of hope on the macro side," said Franz Wenzel, strategist at AXA Investment Managers in Paris.

 

"There's no help from valuations in this environment, and I don't expect a year-end rally. I believe we saw one in the last two weeks but that is melting like the snow in the sun."

 
Underlining the tough macro environment, the Reserve Bank of Australia cut its cash rate by 100 basis points and the Bank of Japan moved to ease an acute cash crunch for companies.

 

The European Central Bank and the Bank of England are due to announce rate decisions on Thursday.

 

Wenzel said he expected the ECB to cut by 75 basis points, or even 100.

 

"I wouldn't be surprised if they went for 100 basis points to signal a red alert, and that would provide a ray of hope," he said.

 

  
Across Europe, Britain's FTSE fell 1 percent, Germany's DAX lost 0.8 percent and France's CAC shed 1.1 percent.

 

Benchmark U.S. Treasury yields traded near five-decade lows after a big market rally the previous day when Federal Reserve Chairman Ben Bernanke signalled that the central bank could buy government and agency bonds.

 
ROUNDING OFF A TERRIBLE YEAR....

 
The FTSEurofirst 300 has fallen 7.9 percent in the first two trading days of the month, suggesting that December will round off in similar vein what has been a horrific year for equities.

 

The index fell 7.2 percent in November, held up slightly by a mini-rally, but it lost nearly 13 percent in October and 11 percent in September.

 
It has fallen for nine of the last 11 months, and is down 47 percent on the year after posting gains in every year over the period 2003-2007.

 

The equities sell-off was sparked by a meltdown in risky U.S. mortgages. This led to massive losses at big banks and tipped leading economies into recession.

 

 
The U.S. National Bureau of Economic Research's business cycle dating committee said that the U.S. economy slipped into recession in December 2007.

 

Shares in mining groups, considered hostage to economic ups and downs, fell sharply.

 

Rio Tinto, Xstrata and BHP Billiton fell 5-6 percent.

 

British retailer Tesco rose 7 percent after the company met forecasts with a 2 percent rise in underlying UK sales and said its new discount range was helping boost sales volumes and customer numbers.

Date created : 2008-12-02

COMMENT(S)