European Stock Indices Fall Three Percent

The values of indices on the most significant stock markets across Europe have sharply declined today after concerns about the credit market crisis intensified, the Japanese yen gained in value, yields on government bonds fell, and all risk indicators reflected a greater investor tendency to flee to safer havens for capital.

The London FTSE plunged nearly three percent by noon, crashing to 5,930 points. The Frankfurt DAX also lost 2.6 percent, dropping to 7,254 points. Other major European stock market indices experienced approximately the same percentage losses. The Paris CAC-40 index fell by 1.9 percent, to 5,342 points. The Swiss market index in Zurich decreased by 2.8 percent, to 8,418 points – a new low for this year, while the Vienna Stock Exchange index lost about 2.5 percent, plummeting to 4,416 points. The largest losses, around 2.7 percent, were suffered by shares in the financial sector as part of a broader decline in stock prices influenced by concerns about their exposure to the crisis-hit U.S. subprime mortgage market.

“Problems in the subprime mortgage market will persist for some time. There have been some days when it was a bit better, but then negative news came to the forefront, and that will continue for some time,” said Bart Ingels, an analyst at Fortis Bank in Brussels. Investors in various asset markets showed a greater tendency to avoid risk. They turned to eurozone government bonds in search of refuge amid widespread sell-offs.

In global foreign exchange markets, the yen briefly recorded its highest level against the dollar and the euro in the last five months. Investor attention during the day will also focus on the release of U.S. data on building permits issued and housing starts in July, as well as the latest unemployment data. All of this will help provide further information about the real estate sector and the health of the broader U.S. economy. The Tokyo Stock Exchange Nikkei index fell nearly two percent, to 16,148 points. (H)