Don't miss




Somalia twin bombings kill 18 in Mogadishu

Read more


Arming the "good guys"?

Read more


Gun Control in the United States: Will the Florida shooting be the turning point?

Read more


Giving a voice to the homeless in France

Read more


'Never Again': The students pushing for US gun control

Read more

#TECH 24

A bright future for solar power

Read more


Winter in France's Burgundy vineyards

Read more


How French cyber police are patrolling the 'Dark Web'

Read more


Marseille mon amour: Mediterranean city celebrates love

Read more


European stocks plunge after 6-week rally

Latest update : 2009-04-20

Driven by fresh worries about US banks, European stock markets suffered heavy losses on Monday, after six consecutive weeks of gains. In London, the FTSE 100 index closed 2.49% lower, while the CAC 40 in Paris lost 3.96%.

AFP - Shares on Wall Street and European stock markets plunged Monday as investors cashed in on a rally amid fears over the future of the US banking sector and warnings about Europe's property market.

The Dow Jones lost 2.81 percent and the Nasdaq index was down 3.37 percent in afternoon trading, while the Standard and Poor's index fell 3.47 percent.

London's FTSE 100 index of leading shares closed down 2.49 percent, the Frankfurt DAX lost 4.07 percent and the CAC 40 in Paris fell 3.96 percent.

Asian markets closed higher earlier in the day, with Tokyo edging up 0.19 percent and Hong Kong gaining 0.96 percent, but investor moods soon turned.

Analysts in the United States said the market was now ripe for a pullback after a 22.7-percent rise in the Dow Jones Industrial Average over the past six weeks -- the best stock market performance over such a period since 1938.

"The market should be showing signs of fatigue and it has," said Al Goldman at Wachovia Securities, a US-based investment company.

"Our short-term technical indicators are overbought and it is about time for a normal correction-pause to refresh."

Michael Bratus at Moody's research group said investors were concerned by weekend comments from US administration officials about the outlook for the banking sector.

Bratus said the fears were based on comments by economic advisers on "the possibility of converting government loans to the country's largest financial institutions into stock."

"Although a conversion would add capital to these financial institutions, worries of share dilution and increased government involvement are weighing on financials," he added.

Investors appeared to shrug off roaring profits from government-rescued Bank of America -- the latest in a line of encouraging corporate results from US banks including Citigroup, JPMorgan Chase and Goldman Sachs.

Paul Nolte at Hinsdale Investments said that even though banks have returned to profitability, the source of these profits may not be sustainable.

"With much of the gains coming from the benevolent government aid -- that is not likely to be repeated in subsequent quarters -- the above-average earnings may be nothing more than a one-quarter phenomenon," he said.

In Europe, stocks fell after JPMorgan put out a research note saying that Europe's commercial property sector was in for more troubled times despite optimistic reports pointing to a recovery in recent weeks.

"European markets opened lower today with the real estate sector particularly suffering after a downbeat JPMorgan note on the European property sector," said analyst Joshua Raymond at spread-betting firm City Index.

Swiss shares were down 2.45 percent, Amesterdam plunged 4.12 percent, Milan dropped 4.04 percent, Belgium fell 3.47 percent and Spain lost 3.46 percent.

There were exceptions however, such as British-Dutch oil major Shell, which saw its shares rise 1.07 percent to 1,416 pence and British energy company Centrica whose shares rose 1.46 percent to 243.50 pence.

In Asia earlier in the day, shares closed slightly higher on investor hopes of a recovery. Shanghai gained 2.14 percent after a report said Chinese state companies' profits shot up almost 86 percent month-on-month in February.

Date created : 2009-04-20