To: michael yatchman who wrote (797 ) 1/13/1999 8:35:00 AM From: William Bach Read Replies (1) | Respond to
SELL EVERYTHING TODAY..........
Wednesday January 13, 7:48 am Eastern Time
FOCUS-Euroshares plunge on worsening Brazil crisis
(Adds Wall St prospects, Brazil developments)
By Leonard Santorelli
LONDON, Jan 13 (Reuters) - European stocks went into sharp reverse on Wednesday as Brazil's financial crisis cast a longs shadow over global stock markets and weakened the dollar.
London, Paris and Frankfurt, which soared last week, tumbled withbanks leading the decline because of worries over exposure to Brazilian debt. Madrid plunged six percent.
The dollar dropped by more than one percent against the euro by Europe's midsession, with sentiment soured by Brazil and the possible fallout on the U.S. economy and stock market.In capital markets, European government bond prices jumped amid
flight-to-quality buying spurred by increased worries over Brazil. Futures were particularly strong.
MARKET PRICES AT 1228 GMT
EURO 1.1701/17 YEN 112.05/15 STERLING
1.6505/15
GOLD $287.55/287.95 -2.00 (pvs PM fix) BRENT $11.19 -0.31
FTSE 5862 -171.60 CAC 3,937.30 -163.40 X-DAX 4974.93 -221.20
London, after reaching a record high last week, dropped nearly three percent amid concerns over Brazilian debt.
''The sellers have the upper hand,'' said one dealer. ''It took Wall Street a long time to react to Brazil's problems, but we have finally woken up to reality.''
The latest crisis in Brazil was sparked last week when the country's third biggest state Minas Gerais announced a 90-day moratorium on payments of its $13.4 billion debt with the federal government.Analysts said concern over Brazil's chances of surviving Asia-style financial collapse was quickly turning to panic.Uncertainty over Brazil's foreign exchange policy heightened as the nation's central bank governor Gustavo Franco announced his resignation on Wednesday and said he recognised the need for more flexible currency and rate policies.
Franco, one of the key defenders of Brazil's stabilisation plan, also said President Fernando Henrique Cardoso wanted a ''reorientation'' of these policies.
In Madrid, top blue chips with heavy exposure to Latin America dived, with telecoms firm Telefonica down 5.0 percent to 37.99 euros and bank BBV losing 4.8 percent at one stage.
''The concerns about Brazil are causing a loss of confidence, and people are more inclined to sell than to buy,'' a dealer with a Spanish bank said.The gloom over Brazil was also seen depressing New York stocks and Wall Street was expected to open well down, based on the March S&P 500 index futures contract trading.Frankfurt dropped 4.3 percent. Banking stocks were all lower amid fears about exposure to Brazil and China's failed
GITIC trust. Deutsche Bank was down 6.5 percent and Dresdner 4.43
percentExporters were also hurt by the stronger euro. Volkswagen fell 6.5 percent and DaimlerChrysler was down four percent.Paris tumbled 4.1 percent caught up in the widenening depression with global markets reacting to worries about Brazil's economy and mounting debts in China.''The markets are really very agitated - there was a feeling some consolidation was needed after last week's gains, but the situation in China and Brazil has alarmed people quite a lot,'' said one strategist.In currencies, the euro strengthened against the dollar as uncertainty over Brazil sent investors scurrying from the U.S. currency.''The market had been expecting bad news ..., and the dollar had been sold off against the euro and sterling,'' said Jesper Dannesboe, treasury
economist at ABN Amro in London.The dollar was also weaker against the yen and rising U.S.-Japan trade tensions were expected to keep pressure on the U.S. currency, dealers said.U.S. Trade Representative Charlene Barshefsky, after meeting Japanese Trade Minister Kaoru Yosano, said the United States would not tolerate unfair practices in the steel or any other market. She said trade tensions ''are increasing, quite dramatically.''
