Open

Coming up

Don't miss

Replay


LATEST SHOWS

THE WORLD THIS WEEK

The World This Week - 01 August 2014 (part 2)

Read more

MEDIAWATCH

Coverage of Gaza in the Israeli media

Read more

REPORTERS

1914-1918: The Depths of Hell

Read more

THE WORLD THIS WEEK

The World This Week - 01 August 2014

Read more

THE INTERVIEW

Exclusive: Israel's US ambassador speaks to FRANCE 24

Read more

#THE 51%

World War One: The war that changed women’s lives

Read more

FRANCE IN FOCUS

Ségolène Royal goes for green

Read more

THE OBSERVERS

A look back at some of the Observers' best stories

Read more

DEBATE

Argentina Defaults: Kirchner Cries Foul Over 'Vulture Funds' (part 2)

Read more

  • Hamas denies capturing Israeli soldier as Gaza truce lies in tatters

    Read more

  • Scores killed in China factory explosion

    Read more

  • Exclusive: Israel's US ambassador speaks to FRANCE 24

    Read more

  • Police 'chokehold' caused NYC death, coroner rules

    Read more

  • French most keen to erase their online footprint, says Google

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Rogue general denies Islamist seizure of Benghazi

    Read more

  • Ugandan court strikes down anti-gay legislation

    Read more

  • 1914-1918: The Depths of Hell

    Read more

  • Regional summit to tackle deadly Ebola outbreak

    Read more

  • French hospital to open wine bar for terminally ill patients

    Read more

  • Video: Tipping is dying out in French café culture

    Read more

  • €2.5 million in cocaine ‘disappears’ from Paris police HQ

    Read more

  • Appeal court keeps French rogue trader Kerviel in jail

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • Ukrainian army suffers losses in separatist attack

    Read more

Europe

European stocks tumble on concern over growth

Text by News Wires

Latest update : 2011-08-18

Europe’s stock markets plunged Thursday amid worries about weakening economies in Europe and the US. Germany’s blue-chip index lost more than 5 percent, while auto and banking shares fell the most.

REUTERS - European equities fell heavily on Thursday, as a bigger-than-expected rise in U.S. weekly jobless claims added to worries about the strength of recovery in the world's biggest economy.

German shares lost the most, with traders citing the effects of a short-selling ban on financial stocks in other parts of Europe.

Germany's blue-chip index was down 5.4 percent on fears that a short-selling ban on financial shares and related financial instruments in France, Italy, Spain and Belgium announced last week had pushed investors towards futures and options on the DAX, excluded from the short-selling ban.

Traders cited investor uncertainty and confusion on whether they can roll their Euro STOXX 50 futures hedge into Friday's expiry, and whether this constitutes a fresh "short" position or not.

"This morning everyone is talking about a 'fat finger' in the DAX futures. However, we don't agree," a trader said.

"We believe this was a new short position. 15,000 contracts traded over a 2 minute span this morning taking the futures down 2.9 percent."

The trader also cited news that Austria was joining Finland in asking Greece for collateral in exchange for emergency loans.

Auto shares, down 6 percent, featured among the worst performers on worries a slowdown in the global economy would dent vehicle demand. Fiat fell 8.9 percent, following disappointing sales news from one of its key markets, Brazil.

At 1354 GMT, the FTSEurofirst 300 index of top European shares was down 4 percent at 932.87 points, and had hit a low of 930.50. The index is down more than 20 percent from a mid-February peak.

The banking sector, exposed to the euro zone debt crisis, was also sharply lower.

The STOXX Europe 600 Banking Index fell 5.9 percent. Heavyweight fallers included Barclays and Societe Generale, down 9.4 and 8.7 percent respectively. Deutsche Bank was down 6 percent.

Investors with a negative view on the outlook for the European stock market can't sell futures or put options on indexes that include banking shares covered by the short selling ban such as the Euro STOXX 50 and the CAC, but they can do it on the DAX derivatives.

"(A) DAX hedge is the next best I suppose and it is getting hit today," a German trader says.
New U.S. claims for unemployment benefits rose more than expected last week, according to a government report.

A Morgan Stanley note saying the global economy was dangerously close to recession added to the gloomy outlook for shares.

Citigroup analysts said GDP forecasts were in the process of coming down to levels consistent with sluggish growth, but not a global recession.

Wall Street was lower in early trade. The Dow Jones, S&P 500 and Nasdaq Composite were down between 3 and 4 percent.

 

Date created : 2011-08-18

  • France

    French economy stalls in second quarter

    Read more

  • MARKETS

    Germany calls for European ban on short-selling

    Read more

  • MARKETS

    Global markets rally on US jobs data

    Read more

COMMENT(S)