Shares tumble worldwide after US car bailout failsDecember 13th, 2008 - 12:06 am ICT by IANS
Frankfurt, Dec 12 (DPA) European shares nose-dived Friday after the failure of the US car industry bail-out sent stocks tumbling in Asia and on Wall Street.Shares on European bourses remained under pressure as the trading week came to a close after Wall Street’s Dow Jones index slumped by about 2.5 percent at its opening Friday.
Amid fears about the fallout for the world economy as a result of the collapse of the US car industry rescue package, Europe’s blue-chip Stoxx 50 was ending the week down about 4 percent at 2,389.91 points.
This followed a more than 3-percent fall in shares in Europe’s leading market in London along with a 3.6-percent slump in Frankfurt and a nearly 4-percent drop in Paris. Zurich was down about 3 per cent.
The nervous trading on global bourses spread to the currency market with the dollar falling to 1.3345 dollars against the euro and dropping to a 13 year-low of under 90 yen against the Japanese currency.
In addition to worries about the fallout for Asian carmakers of the failure of the US auto industry deal, the sharp rise in the yen helped to fuel worries about Japanese exporters, which in turn hit stocks in Tokyo.
The collapse of the bail-out for the crisis-hit US car industry also sparked big falls in key German car stocks and auto maker suppliers with a bleak financial report from a key British lender HBOS Plc also undercutting financial stocks across Europe.
By late afternoon, Germany’s Daimler AG, the maker of Mercedes Benz cars, had lost 7.3 percent while France’s PSA Peugeot Citroen had dropped by 5 percent. Europe’s biggest carmaker Volkswagen AG fared a little better falling by only 1.5 percent.
In the meantime, HBOS cascaded down by 20 percent and Germany’s biggest bank, Deutsche Bank AG fell more than 5 percent after HBOS unveiled 8 billion pounds ($12 billion) in bad loans and losses.
The renewed falls in shares comes after a brittle calm had emerged on global share markets in recent weeks following the big sell off of stocks in the wake of the collapse in September of the giant US investment house Lehman Brothers and growing global recession fears.
However, traders said the plight of the US car industry has served to reignite investors’ worries about the economic prospects for the coming year.
Also helping to fuel the renewed sense of nervousness was the news that Bank of America was slashing its workforce by up to 35,000 over the next three years.
Earlier in the day, Asian stocks closed sharply down Friday on news of the Senate had abandoned a bail-out plan for the US car industry and gloom over the effects of the US financial slump on Asian exporters.
In Japan, stocks dropped 5.56 percent, ending a week of moderate gains, while Hong Kong stocks fell almost 5.5 percent.
Hong Kong-listed Chinese shares led the declines, with losses approaching 7 percent, spurred by disappointment over the lack of further stimulus measures from Beijing at a key annual economic conference that ended Wednesday.
Shares in China’s two stockmarkets plunged by nearly 4 percent. In Taiwan, the TAIEX index fell 174.30 points, or 3.74 percent, to close at 4,481.30.