September 29, 2008
European stocks tumbled to the lowest since January 2005 after bank bailouts accelerated and the $700 billion plan to rescue American financial institutions failed to unlock money markets.
Fortis lost 19 percent and Dexia SA sank 27 percent as the governments of Belgium, the Netherlands and Luxembourg were forced to rescue Fortis and the U.K. seized Bradford & Bingley Plc. Hypo Real Estate Holding AG slid 73 percent after the German government and a group of private banks provided a 35 billion- euro ($50 billion) guarantee for the commercial-property lender.
The Dow Jones Stoxx 600 Index fell 4.3 percent to 254.46 at 2:58 p.m. in London. The gauge is down 30 percent this year as banks worldwide racked up more than $554 billion in credit losses and writedowns, pushing the global economy toward a recession.
“There’s more pain to come,” said Andy Lynch, who manages about $3 billion at Schroder Investment Management Ltd. in London. “People knew the bailout was going to happen. Now it’s back to the same-old, same-old of capital writedowns and weekend bailouts. Earnings estimates for next year still are too high.”
Credit losses at UBS AG, along with profit declines at technology companies such as Ericsson AB, helped send earnings lower at 153 of the 332 members of the Stoxx 600 tracked by Bloomberg that reported quarterly results since the beginning of July. More than 40 percent of the Stoxx 600′s companies trailed Wall Street’s estimates, Bloomberg data show.
National benchmark indexes fell in all of the 18 western European markets. The U.K.’s FTSE 100 sank 3.8 percent, while France’s CAC 40 lost 3.7 percent. Germany’s DAX slid 3.2 percent as Commerzbank AG and Siemens AG also declined.
This article was posted: Monday, September 29, 2008 at 9:40 am