European Shares Fall Sharply as Banks Dive |
http://www.marketwatch.com/news/story/shares-europe-skid-bank-sector/story.aspx?guid={EC779520-B001-4304-ACF2-A97B96D63899}
By Sarah Turner, MarketWatch
LONDON (MarketWatch) –
European shares staggered on Monday, with banks slumping as governments in Europe didn’t match a $700 billion bailout package from the U.S. and instead continued to shore up institutions on a piecemeal basis.
The pan-European Stoxx 600 index fell 5.1% to 248.27, with a 6.9% drop for the banking index.
“It’s all down to what’s going on in the banking sector or perhaps what’s not going on in the banking sector,” said Peter Dixon, strategist at Commerzbank Corporates & Markets.
“This is markets in pure panic mode. The financial system is seizing up and I think that there are major counterparty-risk fears out there in the market. Investors are cutting risk left, right and center,” he said.
“Investors are dumping commodities, they’re dumping equities. Anything with a cyclical or a risk-based element in the returns is somewhere not to be,” he added.
The share move follows an extraordinary weekend in which Germany backed its retail deposits, Iceland reportedly tried to hammer out a plan to rescue its distressed banking industry and the Danish financial sector agreed on a two-year guarantee scheme with the government to shore up confidence.
But a Paris meeting Saturday of top EU leaders — French President Nicolas Sarkozy, German Chancellor Angela Merkel, British Prime Minister Gordon Brown and Italian Prime Minister Silvio Berlusconi — offered no pan-European plan for dealing with troubled banks.
Tags: European Bank Crisis, Pan-European Stoxx 600