Bank worries, sliding oils dent European shares
Fresh concern about banks' financing hit European shares yesterday, although a drop in the oil price and an investor sweep into safe-havens like drug makers and telecoms helped stem the slide in the broader market. The banking sector fell to its lowest...
Fresh concern about banks' financing hit European shares yesterday, although a drop in the oil price and an investor sweep into safe-havens like drug makers and telecoms helped stem the slide in the broader market.
The banking sector fell to its lowest in five years as fears of more write-downs and the need for additional capital raising to restore balance sheets tattered by the credit crunch dented shares in HSBC, UniCredit and others.
The European equities market got some respite mid-afternoon after Federal Reserve Chairman Ben Bernanke said the central bank may extend its emergency lending facility for big Wall Street firms beyond the end of the year, helping soothe some of the concern about banks' access to funding.
The FTSEurofirst 300 index of top European shares ended the day down 1.47 per cent at 1,161.38 points, having fallen earlier by as much as 2.6 per cent.
The index has dropped by about 30 per cent from last July's six-and-a-half-year highs and has lost 15 per cent in the last two months alone as confidence in the outlook for equities has crumbled along with the outlook for global economic growth.
Yet some analysts believe there may be some respite to the selling.
"We're probably close to a bottom, but not the bottom. We're so bombed out, so oversold that we could gradually work our way slightly higher. This is not a good moment to sell. We would sell into a bounce, and sell cyclicals," said Philippe Gijsels, a European equities strategist at Fortis Bank in Brussels.
Credit Suisse fell 3.2 per cent, while in Britain, Barclays and Royal Bank of Scotland fell 1.1 to three per cent and Alliance & Leicester shed nearly 14 per cent.
Irish banks Allied Irish, Anglo Irish and Bank of Ireland were some of the biggest losers in Europe, falling by eight to 10 per cent.
The DJ Stoxx European banks sector index has already fallen 37 per cent this year after a 17 per cent fall last year and it is largely because of the banks that the European equities market has taken such a knock.