By LIZ ALDERMAN
Published: September 11, 2011
Fears of a deepening debt crisis in Europe slammed global stock markets again Monday, especially battering the shares of French banks and financial institutions in other European countries suspected of being vulnerable to a possible Greek default.
Readers? Comments
Worries about the health of Europe?s banks have taken on outsize dimensions in recent weeks, contributing to significant volatility in stock markets worldwide. Investors have grown increasingly suspicious that Europe?s efforts to contain the crisis that began in Greece are falling apart.
The Greek finance minister, Evangelos Venizelos, warned over the weekend that the Greek economy would be likely to shrink 5.3 percent this year ? a sharp downward revision from the previous forecast of a contraction of 3.8 percent. This would make it even more challenging for Greece, which has been at the center of the Continent?s financial woes, to pay its debts.
The latest slide in the currency and stock markets had been set off by the resignation on Friday of J�rgen Stark, a top German official at the European Central Bank, which highlighted policy discord within the central bank.
On Monday, the yield on the Treasury?s benchmark 10-year note was 1.917 percent, slightly lower than 1.92 percent on Friday, and the euro recovered to $1.36 after declining rapidly against the dollar to $1.35 from $1.41 just over a week ago.
Eric Viloria, senior market strategist for FOREX.com, said on Monday that Mr. Stark?s resignation had added to concerns in the currency markets that Germany was preparing contingency plans for its banks in the event of a Greek default. Greek bonds showed record high yield spreads, while German bonds were at lows on Monday, he noted.
?There are actually quite a bit of factors that are weighing on the euro today,? Mr. Viloria said. ?It is certainly risk-off. You are seeing some dollar strength, and that is highlighted by the yields.?
Stocks on Wall Street opened lower but quickly turned mixed, with the broader market as measured by the Standard & Poor?s 500-stock index off a fraction to 1,14.04 at noon. The Dow Jones industrial average lost 0.9 percent to 10,899.00, and the Nasdaq composite index was flat at 2,464.72.
In late trading in Europe, the FTSE 100 in Britain dropped 1.6 percent and the Euro Stoxx 50 index of euro-zone blue chips was off 3.8 percent. The DAX in Germany lost 2.3 percent, and the CAC 40 in France tumbled 4 percent despite a fresh volley of efforts by the French government and one of the hardest-hit banks, Soci�t� G�n�rale, to calm nerves.
Asian markets also slumped. The Nikkei 225 index closed down 2.3 percent, and the Hang Seng in Hong Kong fell 4.2 percent.
Russell Price, a senior economist with Ameriprise Financial, said the European markets were still feeling the effects of last week.
?There is a bit of a catch-up to the American markets and the downdraft created by concerns over Greece,? he said.
The stock price of Soci�t� G�n�rale and BNP Paribas, both globally interconnected French banks considered by some as too big to fail, plunged up to 12 percent in early trading Monday as investors braced for a possible downgrade to their credit ratings. Moody?s Investor Services had recently warned about the banks? exposure to Greek sovereign debt.
While any downgrade was expected to be small, it would likely fan further turmoil in financial markets, just as the Standard & Poor?s downgrade of United States debt by one notch stoked greater volatility than originally anticipated.
Soci�t� G�n�rale tried to head off trouble Monday with a statement before markets opened, saying that it holds relatively little in the way of troubled government bonds from Greece, Ireland, Italy, Portugal or Spain.
The bank said that it was stepping up efforts to reduce costs and strengthen its balance sheet, and that it planned to free up 4 billion euros, or $5.4 billion, of capital by 2013 through the sale of assets.
The governor of France?s central bank, Christian Noyer, also sought to put out the flames on Monday. ?No matter what the Greek scenario, and whatever measures must be passed, French banks have the means to face up to it,? he said in a statement.
That did little to placate the concerns. After trading at 40 euros in early July, the shares of Soci�t� G�n�rale had slid to just above 15 euros on Monday ? a level that is considered a crucial psychological threshold. In what may be a self-fulfilling spiral, investors have been questioning why the shares would be trading so low if the bank is as healthy as its executives and the French government say it is.
The biggest banks in Europe, especially in France, hold billions of euros? worth of Greek bonds, and investors fear that even a partial default by Greece would sharply diminish the value of those assets, eroding what are perceived to be already weak capital positions.
A much-anticipated jobs program speech by President Obama, meanwhile, had done little to lift the global malaise about the prospects for economic growth in the United States. The Dow and S.&P. both slumped 2.7 percent on Friday. China, however, remains one of the world?s main engines of growth, although the pace is moderating, data released Monday showed.
Exports from China were up 24.5 percent in August from a year earlier and imports climbed 30.2 percent. Local banks extended nearly 580 billion renminbi, or $90.8 billion, in loans, in the same month, which was more than analysts had expected.
Christine Hauser contributed reporting from New York, and Bettina Wassener contributed from Hong Kong.
More Headlines From Around the Web
| You think the Euro Crisis ends with Greece? Think again... free report. | |
| Tagesgeld-Konten mit Top-Zinsen im aktuellsten Online-Vergleich! | |
| up to 75% Profit on Each Trade! Turn $1K into $1750. Start Now |
Log in to see what your friends are sharing on nytimes.com. Privacy Policy What?s This?
What?s Popular Now 
Self-discovery starts with an insightful quiz that understands who you are, allowing The New York Times marketing department to make personalized product recommendations.
| You think the Euro Crisis ends with Greece? Think again... free report. | |
| up to 75% Profit on Each Trade Simple & Rewarding. Start Now! | |
| Tagesgeld-Konten mit Top-Zinsen im aktuellsten Online-Vergleich! |
More in Business Day (3 of 21 articles)
Source: http://www.nytimes.com/2011/09/13/business/daily-stock-market-activity.html?_r=1&partner=rss&emc=rss
No comments:
Post a Comment