European stock markets fell on Thursday under pressure from the decline in the banking sector after the U.S. Federal Reserve announced the phasing out of most extraordinary economic support measures at the beginning of 2010, while global regulators proposed stricter regulations for bank capital.
In such an environment, the London FTSE index weakened by 0.8 percent to 5,278 points. The Frankfurt DAX was down 0.6 percent, falling to 5,869 points. The Basel Committee on Banking Supervision today announced proposals for strict new regulations under which banks will have to set aside larger amounts or even raise capital starting in 2012 to protect themselves from crises. The mood was further dampened by the announcement from the U.S. Federal Reserve that it would phase out most liquidity-boosting measures in the U.S. financial system at the beginning of next year.
The financial sector was the biggest loser today. Shares of Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of Scotland, Societe Generale, UBS, and Commerzbank fell between 1.5 and 3.6 percent. The drop in oil prices also hit shares in the energy sector, with Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total, and StatoilHydro falling between 0.2 and 1.4 percent. Mining company shares were also among the losers. Shares of BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata, and ENRC fell between 0.5 and 4.1 percent. "Markets continue to struggle to discern the trend and determine whether the improvement in economic conditions is a result of government stimulus packages," explains Justin Urquhart Stewart from Seven Investment Management. The Nikkei index of the Tokyo Stock Exchange closed trading down 0.1 percent, slipping to 10,163 points. (H)
