A roundup of trading on major world markets:
NEW YORK – Wall Street was closed for the US Labor Day public holiday.
LONDON – European stocks tumbled about four per cent on Monday, with bank stocks hit particularly hard by acute tension over the risk of recession in leading economies and over eurozone debt.
London’s FTSE 100 index of leading companies dropped 3.58 per cent to 5,102.58 points.
In Paris, the CAC 40 fell 4.73 per cent to 2,999.54 points and in Frankfurt the DAX plunged 5.28 per cent to a two-year low at 5,246.18 points.
Elsewhere in Europe, Lisbon gave up 2.82 per cent, Swiss stocks 4.04 per cent, Brussels 4.61 per cent, Madrid 4.69 per cent, and Milan 4.83 per cent.
Bonds issued by Greece and Italy fell, and the cost of insuring against default by Italy and France, as indicated by the market for credit default swap (CDS) instruments, rose sharply.
The euro fell below $US1.41 during the trading session, while the price of gold jumped back above $US1,900 an ounce on demand for a safe haven investment. The single European currency later recovered to $US1.4109 in late afternoon trading against $US1.4203 late on Friday.
The head of the European Central Bank Jean-Claude Trichet warned Monday of an immediate and imperative need for enactment of a second debt rescue for Greece, and for tightened discipline in the management of eurozone economies. He also spoke of an eventual “confederal” disciplined management of eurozone national finances.
And the head of the International Monetary Fund, Christine Lagarde, repeated her warning that banks in Europe need extra capital to withstand any contagion from the eurozone debt crisis. ECB data showed that eurozone banks have deposited record amounts of overnight funds with it, a signal of reluctance by banks to lend to each other.
European bank shares slumped on the developments.
In Britain, Royal Bank of Scotland (RBS) slumped 12.32 per cent to 21.78 pence, while Lloyds Banking Group (LBG) dropped 7.46 per cent to 30.65 pence and Barclays fell 6.69 per cent to 154.15 pence.
Societe Generale was hit the hardest on Paris’s CAC 40 index with a fall of 8.64 per cent to 20.25 euros, with BNP Paribas dropping 6.34 per cent to 31.30 euros.
Shares in Deutsche Bank fell 8.86 per cent to 23.72 euros, not helped by its chief Josef Ackermann saying the situation resembled that of the panic that followed the collapse of US investment bank Lehman Brothers in 2008 and threw the world economy into recession.
Italy’s UniCredit fell 7.30 per cent to 0.832 euros and Intesa Sanpaolo dropped 6.96 per cent to 1.029 euros.
In Switzerland, Credit Suisse fell 8.13 per cent to 19.99 francs and UBS lost 6.52 per cent to close at 10.32 per share.
Spain’s Santander fell 5.94 per cent to 5.766 euros.
HONG KONG – Asian markets have fallen sharply while the euro took a beating after a poor US jobs report added to fears that the world’s largest economy is facing a renewed recession.
Stocks were down across the board on Monday, following Wall Street’s lead, as investors piled into bonds, gold and other safe havens, seeking shelter from the gathering economic clouds.
Tokyo dived 1.86 per cent, or 166.28 points, to 8,784.46, Sydney shed 2.38 per cent, or 100.9 points, to 4,141.9 and Seoul plummeted 4.39 per cent, or 81.92 points, to 1,785.83.
Hong Kong tumbled 2.95 per cent, or 596.51 points, to 19,616.40 while Shanghai shed 1.96 per cent, or 49.54 points, to 2,478.74, with traders citing fears about persistent inflation in China and its possible dampening effect on growth.
Markets in Asia were taking their lead from Wall Street’s performance on Friday, where the Dow Jones Industrial Average fell 2.20 per cent to 11,240.26 on dismal August employment figures.
Singapore tumbled 2.46 per cent, or 69.92 points, to 2,773.17.
WELLINGTON – Wellington fell 0.31 per cent, or 10.09 points, to 3,293.13.
