21 Jan 2009

Banks continue to slide

7:54 am on 21 January 2009

European shares fell 2.1% on Tuesday on further concerns about whether the financial sector will need more state help for various banks to survive.

Lloyds in Britain plunged 31% and KBC Groep in Belgium lost 24%. French banks also took a hammering: BNP Paribas fell 13% and Societe Generale lost nearly 14%.

Insurers also lost ground: Swiss Re was down 8.8%, Allianz fell 5.8%and ING Groep slipped 13.5%.

The FTSEurofirst 300 index of top European shares closed 16.75 points lower at 774.48. The index is down more than 7% already this year, after slumping 45% in 2008.

In Frankfurt, the DAX index ended at 4,239.85 points, down 76.29 or 1.77%. In Paris, the CAC-40 index closed at 2,925.28 points, down 64.41 or 2.15%.

The Swiss market index closed at 5,321 points, down 60.37 or 1.12%.

The FTSE 100 index in Britain closed 0.42% lower on Tuesday, down 17.07 points, at 4,091.40, after losing 0.9% on Monday.

The index is down over 7% this month after plunging more than 31% last year.

Lloyds Banking Group was the main casualty on Tuesday, shedding almost a third of its value. A spokesman said the bank continued to trade satisfactorily since its last update.

Barclays also fell sharply, down 17.2%, while HSBC shed 3.2%.

Royal Bank of Scotland fell 11.2%, having lost two-thirds of its value on Monday.

French Prime Minister Francois Fillon said carmakers needed massive aid fast, and his government was considering a package to help them worth 5-6 billion euros.

Peugeot fell 6.5% and Renault slumped 8.8%.

Other markets

In Tokyo - the Nikkei index slid 191.06 points, 2.31%, to 8,065.79, after moving below the 8,000 mark at one stage.

Shares also closed lower in Hong Kong. The Hang Seng Index closed down 2.85% or 380.22 points at 12,959.77, on turnover of HK$39.6 billion.

In Australia, stocks fell 3.14%, led by miners and banks. The S&P/ASX 200 index fell 112.7 points to 3,476.6.

The NZX 50 index closed down four points to 2747 on turnover of $62 million on Tuesday.

The New Zealand dollar was buying 55.38 US cents, 81.05 Australian cents, 37.21 pence, 50.36 yen and 0.4144 euro. The Trade Weighted Index was 54.75.