Wednesday August 5, 4:15 am Eastern Time FOCUS-European stocks shudder with Wall Street
By Malcolm Davidson
LONDON, Aug 5 (Reuters) - European stock markets shuddered on Wednesday after U.S. stocks suffered their steepest sell-off this year and Asian bourses slipped across the board.
German stocks led the way down in Europe, plunging 3.3 percent in the first few minutes of electronic trade before clawing back about half of their losses.
It was the same across much of Europe as markets opened uniformly down -- all caught in the headlights of Wall Street's losses.
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MARKET PRICES AT 0806 GMT
MARK 1.7693/77 YEN 143.74/84 STERLING 1.6382/89
GOLD $288.50/289.00 +2.60 (pvs PM fix) BRENT $0.00 -0.00
FTSE 5666.4 -69.70 CAC 3,989.65 -58.23 X-DAX 5626.94 -91.76
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''Wall Street has suddenly woken up to some of the problems we have been discounting,'' said one dealer. ''And nerves have cracked.''
The dollar fell with Wall Street, bringing some relief to the battered yen. But bond markets and gold rose as investors around the world looked for safe havens for their funds.
Wall Street's 3.4 percent fall was the Dow's third-largest in point terms, eclipsed only by the October crashes of 1987 and 1997 when the index fell by more than 500 points.
The drop has already erased the gains made since the spring, and the recent market deterioration has now spread from small stocks up the ladder to the very largest.
The U.S. Nasdaq composite index, laced with technology issues, lost 3.5 percent in its second-biggest point drop.
The intensified selling, amid worries about Asia, global economic cooling and U.S. corporate profits, sent some bulls into retreat with the Dow close to the 10 percent decline that would count as a
''correction'' in traditional terms.
Sentiment was affected by comments from Ralph Acampora, a strategist at Prudential Securities and well known ''bull'' of Wall Street. He said there was now only a 50/50 chance of the Dow hitting the
magic 10,000 level by the year end.
Some European traders were more cautious than their U.S. counterparts, however.
The Paris bourse fell around 2.5 percent in early trade, too, but it later recovered somewhat and dealers drew some relief from the fact that Tokyo's Nikkei 225 index ended only slightly down after
earlier steep losses.
''There is no panic in Paris this morning because of an underlying belief that French earnings are less vulnerable than those in the U.S.,'' said one trader.
It was a similar story in London, where the blue chip FTSE 100 index fell nearly one percent in the first five minutes of trade.
''We are unlikely to fall to the same degree as Wall Street,'' said one dealer. ''London is still the worst performing market in Europe and is already discounting some of the worries that Wall Street is
waking up to.''
From London's peak two weeks ago, the FTSE has tumbled more than seven percent.
''Wall Street can't hold its multiple in the light of miniscule earnings,'' the first dealer said. ''But we
are not on as big a multiple and are operating nearer to reality.'' |
