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Global Selloff Continues, European Stocks Decline
Global Selloff Continues, European Stocks Decline
CNBC.com | 15 Aug 2007 | 04:24 AM ET
European stocks followed U.S. and Asian markets sharply lower Wednesday as concerns about the credit markets continued and risk aversion extended to the currency markets.
"This is mutating into something a lot more nasty," David Bloom, currency strategist at HSBC, told "Squawk Box Europe," adding that investors were abandoning positions in high-yielding currencies and should continue to do so.
"If you've still got them you're not sleeping very well at night, just get out," said Bloom.
Nestle was the only positive stock in an otherwise negative SMI as the world's largest food maker posted stellar earnings and took advantage of its depleted stock price to launch a $21 billion share buyback program. Shares of Nestle surged 6.7%.
Positive earnings were also delivered from British construction and services group Balfour Beatty, which posted a 36% rise in first-half profit after winning key U.S. contracts. But shares in the company fell 0.3%.
In merger and acquisition news Iceland's Kaupthing Bank agreed to buy Dutch merchant bank NIBC for 2.99 billion euros ($4.1 billion), not including NIBC's U.S. subprime portfolio.
Asian Markets Selloff
Asian markets were battered in the afternoon session Wednesday with Hong Kong and Singapore plunging. Australia shed almost 3% while Japan closed at its lowest for the year as investors sold out of risky trades amid growing credit jitters.
Shares of Mitsubishi UFJ Financial Group, Macquarie Bank and other large banks in Asia took a beating, hit by renewed concern about their exposure to the high-risk U.S. subprime mortgage market and turmoil in global credit markets.
Tokyo's Nikkei 225 average NIKKEI
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[NIKKEI Loading... (%) ] slide more than 2% to hit their lowest in more than eight months as financial shares and exporters were hit hard by concern over a slowdown in the U.S. economy. Matsushita Electric Industrial tumbled 5% after Nokia said it would recall 46 million batteries made by Matsushita and used in its mobile phones.
In Australia, the S&P/ASX 200 Index finished 2.96% down at a five-month low as fresh signs of trouble in credit markets sent financial shares such as Macquarie Bank lower, while a tumble in metal prices pressured mining firms.
In markets still trading, China's Shanghai Composite Index hit a new record high in early trade but then fell flat as a wave of profit-taking hit the broad market. Shares began falling as the Hong Kong market tumbled.
Hong Kong blue chips plunged 2.8% and China plays dived 3.5% in a broad selloff as worries about the health of credit markets escalated after a U.S. investment firm sought to block client redemptions. HSBC Holdings looked set to clock its fifth straight loss, having earlier hit a more than four-month low.
Singapore's Straits Times Index tumbled more than 3% lower as bank stocks extended earlier losses, mirroring falling shares on Wall Street and lower Asian markets.
South Korean financial markets are closed for a public holiday. Trading resumes on Thursday.
© 2007 CNBC.com
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2007-08-15 16:34:21
