Date: Thursday 20 May 2010
European markets plunged Thursday as fears about the region's debt crisis intensified and on worries about German demands for tougher regulation of financial markets.
Banks found the going especially tough. HSBC and Standard Chartered helpe drag London down 84 points, while Deutsche Bank, Credit Agricole, and SocGen fell sharply on the mainland, as did carmakers Renault, Peugeot, BMW and Daimler.
Wall Street also took a pounding as German chancellor Angela Merkel issued more controversial comments, including advocating a hands-on global response to market regulation involving scrutiny of countries' budgets and a bank levy.
German Chancellor Angela Merkel has demanded a strong international response to the regulation of markets and the financial industry. She called on the G20 group of advanced and emerging economies to display a "common signal of strength" when they meet in Canada next month.
Merkel pointed out that greater regulation has been talked about ever since the financial crisis began. “At some point we have to show: we've done it," she told her audience.
The eurozone's largest economy also wants all states within the single currency run at least a small budget surplus rather than huge deficits, and that Brussels be given powers to co-ordinate national budgets. The clampdown on financial markets was evidenced by yesterday’s ban on naked short selling of euro debt and leading banking shares.
US data showing a surprise increase in the number of Americans filing first claims for jobless benefit heaped further misery on markets. Some 471,000 claims were made last week, up 25,000 on the week before. Economists thought the figure would fall to 440,000.
Frankfurt sank 120 points, or 2%, to 5,867, Paris staggered 79 lower to 3,432, while the Swiss exchange fell 112 to 6,262.
A senior eurozone official said on Thursday that while the pace of the euro's decline is a concern, foreign-exchange intervention to stop the fall is not on the cards. Jean-Claude Juncker, who leads the group of eurozone finance ministers, told reporters in Tokyo: "I'm really concerned about the rapid [pace] of the fall of the exchange rate."
When asked about the possibility of intervention, he said: "I don't think this is a matter requiring immediate action." The euro fell again on Thursday after a brief rebound yesterday, edging back towards a four-year low.
Juncker’s comments come as European finance ministers are preparing for emergency talks tomorrow. Merkel is expected to call for new rules giving Brussels powers to co-ordinate national budgets.
Air France-KLM announced late yesterday that fourth-quarter losses widened to €691m and reaffirmed its goal to break even at the operating level in 2011.
CAC 40 - Risers
L'Oreal (OR) € 74.72 +2.01%
CAC 40 - Fallers
Alcatel-Lucent (ALU) € 1.87 -6.35%
Sanofi-Aventis (SAN) € 47.47 -5.78%
Vallourec (VK) € 145.30 -5.59%
ArcelorMittal SA (MT) € 23.82 -3.91%
Lafarge (LG) € 45.07 -3.37%
Technip (TEC) € 51.27 -3.25%
Renault (RNO) € 28.53 -3.22%
LVMH (MC) € 83.41 -3.19%
Essilor International (EI) € 46.14 -3.18%
Bouygues (EN) € 32.75 -3.12%
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