VARIOUS: European shares in seesaw trading

European shares return to negative territory in choppy trade, with mining and chemical stocks slipping. There is growing concern that a global credit crunch could slow growth. European markets continued to be battered by fears of financial instability on Friday (August 17) following troubles with risky U.S. mortgages and a squeeze on credit that has prompted central banks to push money into the financial system. By 1036 GMT, the FTSEurofirst 300 index of leading European shares was down 0.5 percent at 1,434.05 points after earlier falling nearly 1 percent to hit its lowest point this year. Senior equities strategist for Fortis Global Markets, Philippe Gijsels, said despite hopes European shares would rebound, there was still a lot of scepticism. "The mood is once again quite dismal. We hoped that Europe would rebound a little bit this morning from the losses from yesterday because Wall Street came back, the Dow Jones came back from a more than 300 point loss but then again when we saw the opening we saw that Asian markets were down quite heavily. There seems to be a little bit contagion over there also," said Gijsels in an interview at his office in Brussels. Mining shares like Anglo American and Rio Tinto and chemical shares such as BASF and Bayer were among the biggest weights on the FTSEurofirst 300 index. Such firms depend largely on the health of the general economy and investors increasingly fear that a global credit crunch will slow growth. Germany's DAX index was down 0.4 percent, the UK's FTSE 100 index fell 0.2 percent and France's CAC 40 dropped 0.2 percent. Banking shares had lifted the index in early morning trade with Societe Generale rising 2.2 percent, ABN AMRO and BNP Paribas gaining 1 percent. Financial stocks took their cue from an end-of-day rally in U.S. markets, which pushed the S&P benchmark index into positive territory, fuelled by speculation about a possible Federal Reserve interest rate cut. One financial expert in France says although the worst could be over, there is still a lot to be worried about. "I think the markets are going to remain extremely unsteady. They will be waiting for any possible updates on the real exposure of the financial institutions and the hedge funds to the subprimes and structured products. However I think that the fundamental core of the fall is behind us," said Harry Wolhandler, director general of CFD Capital Management. Markets all over the world are being battered by fears of financial instability following troubles with risky U.S. mortgages. This has led to a squeeze on credit that has prompted central banks to push money into the financial system.

ITN Source | August 17, 2007

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