Smaller losses on European exchanges than on Wall Street

Shaken by yesterday’s record drop of the Dow Jones index on Wall Street, leading indices on European exchanges fell significantly at the start of today’s trading, but less than on the New York Stock Exchange.

The FTSEurofirst 300 index of leading European stocks fell 2 percent this morning, to 1,026 points, the lowest level since December 2004. The London FTSE index is currently down about 0.5 percent, while the Paris CAC is down about 0.7 percent. The DAX index of the Frankfurt Stock Exchange is down more than 1 percent. After the U.S. House of Representatives rejected the government’s plan to bail out banks yesterday, stock prices on Wall Street plummeted, and this morning on Asian exchanges as well, which is why there will be nervousness in European markets today, analysts say.

"I believe that measures to rescue the financial system will be accepted in the U.S. Congress, at the earliest on Thursday. Until then, there will be concern for the financial sector and fear of the largest world economies falling into recession," states a note from Commerzbank to clients. The financial sector is under the most pressure this morning. The share price of Italian UniCredit has plunged 9.5, Royal Bank of Scotland 9.3, and Swiss UBS 6 percent.

This is expected, given that yesterday the British mortgage bank Bradford & Bingley and the Dutch-Belgian financial group Fortis were nationalized in an emergency procedure, and that state loans saved the German mortgage company Hypo Real Estate at the last minute from collapse. Additionally, yesterday Wachovia, the sixth largest U.S. bank by assets, was sold to Citigroup. "I believe these are not the last victims of the credit crisis. I expect bank stock prices to continue to fall, but I do not expect panic in the market," says Heino Ruland, an analyst at FrankfurtFinanz. On the Tokyo Stock Exchange, the Nikkei index plunged 4.1 percent this morning, to 11,259 points, the lowest level in three years. At the start of trading, it was down about 5 percent, but by the end of the meeting, it had somewhat reduced its losses. (H)