France's biggest lenders saw their shares fall more than 10pc amid fears their credit ratings will be downgraded over exposure to Greek debt, while global stock markets dropped sharply.
The FTSE saw £22bn knocked off its value, closing down 85.03 at 5129.62. The Cac-40 in France ended 4pc lower and the Dax in Frankfurt was down 2.3pc after touching its lowest point since July 2009.
In the US, the Dow Jones closed up 0.6pc at 11061.12. It was trading down 0.8pc in the afternoon, with analysts at Bank of America souring the mood further by warning that the S&P 500 – which was 1pc lower at 1145.57 – could fall as far at 910. The warning came as Bank of America announced 30,000 job cuts as it looks to adjust to tough trading conditions.
Market concerns escalated after Germany hardened its tone over bail-out loans for Greece, with Chancellor Angela Merkel backing remarks from her economy minister suggesting that an "orderly default" could no longer be ruled out.
German officials reiterated that Greece must meet bail-out terms to secure the next tranche of loans while the embattled country's deputy finance minister suggested cash could run low from next month. "We have definite manoeuvering space within October," said Philippos Sachinidis when asked how long the government would be able to pay wages and pensions.
The euro dropped to a 10-year low versus the yen and a seven-month low against the dollar as currency traders shifted their holdings to safe havens. The shift to the yen keeps alive the risk that Japanese authorities will follow the Swiss in intervening to weaken their currency.
"With the Swiss National Bank drawing a line in the sand, investors looking to exit the eurozone troubles are seeking the safety of the yen," said Jane Foley, senior currency strategist at Rabobank. The pound fell to a two-month low versus the dollar, with the yield of 10-year gilts hitting record lows of 2.198pc on safe-haven buying.
Markets braced themselves for credit rating downgrades for France's top banks, with speculation that Moody's will lower the ratings on BNP Paribas, Credit Agricole and Societe Generale. Credit Agricole shares fell 10.6pc, Societe Generale slid 10.5pc and BNP was off 12.4pc.
Societe Generale claimed its exposure to periphery eurozone debt was €4.3bn (£3.7bn), a level it labelled "declining and manageable". It said it would nonetheless speed up asset disposals and cut costs to free up capital.
BNP Paribas issued a statement in which it pointed out that Moody's had put French banks on review for downgrade as far back as June and that no rating decision had been "communicated". The bank said it had €3.5bn of exposure to Greek sovereign debt.
According to a report by the Bank for International Settlements, released in June, French banks top the list of creditors to Greek debt, with $56.7bn (£35.8bn) of exposure.
Bond yields for Europe's periphery nations were also hit hard. Italy sold €7.5bn of one-year debt at an average yield of 4.15pc, the highest level since September 2008.
Meanwhile, credit default swaps (CDS) on Greek debt – which measure the likelihood of default – soared to a record 3,650 basis points and Italian CDS broke through the 500 barrier for the first time.
The Telegraph
hostgator coupon 2011
No comments:
Post a Comment