In early afternoon deals, the Paris stock market plunged 3.20 percent, London lost 0.77 percent and Frankfurt shed 1.58 percent, as Europe’s main markets gave up earlier gains. Milan stocks slumped 2.66 percent and Madrid 1.67 percent as investors remained on edge over the eurozone debt crisis which threatens to snare both Spain and Italy after Greece, Ireland and Portugal.
“Continued skittishness about the state of Europe’s banks and their finances is keeping investors on the back foot ... with financial stocks driving sentiment,” CMC Markets analyst Michael Hewson told AFP. European equities had earlier rallied in morning deals, after sliding the previous day on rumours of a France credit rating downgrade and worries over the Greek debt exposure of French bank Societe Generale.
However, in Thursday afternoon trade, Societe Generale slumped 8.27 percent, having earlier soared by almost nine percent as the French banking giant denied it was in trouble over its Greek exposure. At one stage on Wednesday, Societe Generale had seen its share price collapse by more than 20 percent. “Panic was laid bare yesterday by the pace at which rumours ... spread through the market,” said Rabobank analyst Jane Foley in London on Thursday. “The market has come to accept that French banks have a relatively high exposure to Italian and peripheral debt but yesterday’s reaction appeared extreme.”
In early foreign exchange deals, the dollar sank as low as 76.31 yen as investors flocked to the relative safety of the Japanese currency. That was not far from its post-World War II low of 76.25 yen. Asian stock markets mostly fell on Thursday but closed off their early lows as some traders went bargain-hunting despite Wednesday’s huge falls in Europe and on Wall Street.
New York’s Dow Jones Industrial Average plummeted over four percent Wednesday, more than wiping out a rebound on Tuesday as European debt troubles and worries of a new US recession kept investors nervous. The French government has flatly denied that it might be the next major country to lose its cherished AAA status and the ratings agencies said they did not plan to downgrade
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