German stocks at 27-month lowOctober 7th, 2008 - 1:06 am ICT by IANS
Frankfurt, Oct 6 (DPA) Growing uncertainty about the health of Europe’s banking system sent German stocks plunging to a 27-month low on Monday.The 50-billion-euro ($68-billion) bail-out of troubled German property lender Hypo Real Estate (HRE) failed to impress investors, increasing pressure on markets.
Germany’s blue chip DAX lost 7.07 percent to end the day at 5,387.01, its lowest level since July 2006.
All but two companies on the 30-share index suffered losses, with financial institutions leading the way.
HRE was 37.42 percent lower at 4.70 euros, while Commerzbank slumped more than 14 percent to 11.90 euros and Deutsche Bank, Germany’s biggest, was off more than 9 percent at 47.86.
“Investors’ confidence has been badly shaken by the Hypo Real Estate crisis,” said Christian Schmidt, an analyst with the bank Helaba.
Relations between the banks themselves had also failed to return to normal, he said.
HRE, which mainly lends to commercial projects and to build public facilities such as airports and roads, is the biggest German casualty of the credit crunch that has spread from New York in the last month.
The bank fell into crisis after its Dublin-based subsidiary Depfa ran out of cash.
The crisis prompted the German government to issue a “political guarantee” that depositors’ savings were safe.
The euro was also caught up in the financial turmoil, slipping to $1.3486, its lowest rate against the US currency in 13 months.