24 Sep 2008

Global stocks fall on doubts about fate of bailout

7:09 am on 24 September 2008

A proposed $US700 billion bailout of Wall Street dominated markets on Tuesday. The dollar rose on optimism the plan would aid the economy but global stocks fell on uncertainty over its fate.

European shares ended sharply lower for the second day. The pan-European FTSEurofirst 300 index ended 1.6% lower at 1,108.54 points, adding to a 2.1% loss on Monday after a record surge on Friday.

In Frankfurt, the DAX index ended at 6,068.53 points, down 39.22 or 0.64%.

In Paris, the CAC-40 index closed at 4,139.82 points, down 83.69 or 1.98%. The Swiss market index closed at 6,805.53 points, down 81.86 or 1.19%.

In Britain, the FTSE 100 closed 100.1 points lower at 5,136.1. The index lost 1.4% on Monday and is down 20.5% for the year.

Banks were among the main losers with Barclays, Royal Bank of Scotland, Lloyds TSB, HBOS and Standard Chartered losing between 2% - 13.8%.

Oil prices fell. Other commodities also tumbled, with copper down almost 4%. Gold was trading at $US885 an ounce.

US Federal Reserve Chairman Ben Bernanke told Congress that financial markets are under severe stress and urged immediate action to buy billions of dollars worth of tainted mortgage assets.

Treasury Secretary Henry Paulson also called on Congress not to weigh down the proposed bailout with unrelated provisions that would delay addressing key issues.

NZ & Australia

The NZX 50 index fell 28 points on Tuesday to close at 3228 on turnover of $118 million.

Telecom was down 2c to $2.80, while Contact Energy was down 10c to $2.60 after saying it will double directors' fees.

Fletcher Building was down 2c to $7.30, Sky Network Television was down 14c to $4.50 and Air New Zealand was down 5c to $1.03. The Warehouse finished down 1c to $3.14.

In the currency markets: at 6.30am on Wednesday, the New Zealand was trading at US68.31 cents, 81.78 Australian cents, 36.75 pence, 71.87 yen, and 0.4642 euro. The Trade Weighted Index was at 63.8.

The Australian sharemarket closed down almost 2%.

The S&P/ASX200 index was down 97 points, or 1.93%, to 4923.5, while the All Ordinaries lost 92.4 points, or 1.83%, to 4957.7.

On the Sydney Futures Exchange, the December shares price index contract was 36 points lower at 4,995, on a volume of 32,016 contracts.