×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

European shares fall, SocGen slides after profit warning

European shares fall, SocGen slides after profit warning
Comment E-mail Print Share
First Published: Wed, Aug 03 2011. 06 05 PM IST
Updated: Wed, Aug 03 2011. 06 05 PM IST
Frankfurt: European shares extended losses on Wednesday, led by France’s Societe Generale which fell more than 7% after the bank warned it might miss 2012 profit goals.
The French bank took a €395 million pretax hit on its exposure to Greece because of its contribution to the country’s bailout plan.
Investors are growing more concerned over global growth prospects after a run of weak macro-economic data and also about the spread of the euro zone’s sovereign debt crisis to Italy, the currency bloc’s third largest economy.
Italy’s blue chip index rebounded from earlier losses and traded up 0.9% by 4:55pm. Traders said the recovery was partly technically-driven after the index hit a 27-month low on Tuesday.
The Italian FTSE MIB share index has fallen into bear market territory, characterised by a fall of more than 20% over a prolonged period.
It was the first major European stock market index to drop more than 20% in the past few months to hit its lowest level since early 2009, the height of the financial crisis.
ING senior economist Carsten Brzeski said the weak global economy might put the European Central Bank in a dilemma as its governing council members gather on Thursday for their monthly meeting.
“It is no secret that the ECB would, ordinarily, prefer to continue its hiking cycle,” he said.
“However, with the worsening economic outlook, the window of opportunity for further rate hikes appears to be closing quickly, leaving the ECB with two options: either to rush into the next rate hike or prepare for a long pause.”
The FTSEurofirst 300 index of top European shares was down 0.4% at 1,044.90 points, extending a three-session losing streak.
Across Europe, Britain’s FTSE 100 was down 1.1%; Germany’s DAX and France’s CAC40 fell 0.7 and 0.6% respectively.
Late on Tuesday, Moody’s and Fitch confirmed the United States’ triple-A credit rating after a last-minute deal to avoid a debt default was approved in Washington, but Moody’s pinned a negative outlook to the AAA rating, which means a downgrade could come in the next 12 to 18 months.
“This week’s decisions on Capitol Hill can only be regarded as a first small step of a future comprehensive plan,” UniCredit analyst Tim Brunne said.
“The US is at risk of getting the European disease of a piecemeal approach to tackling its debt sustainability issues,” he added.
Investors will watch the ADP Employment Report, ahead of for Friday’s key non-farm payrolls, due at 5:45pm.
Comment E-mail Print Share
First Published: Wed, Aug 03 2011. 06 05 PM IST
More Topics: Markets | Europe | Stocks | STOXX | CAC |