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Anxiety drags down US and European stock markets | |
(about 3 hours later) | |
The index of London's leading shares has fallen 1.5%, while US and European markets have also posted sharp declines amid continued anxiety about the state of the global economy. | |
The FTSE 100 was down 83 points at 5,587 points in afternoon trading. | |
Markets in Frankfurt and Paris were down 1.8% and 2.9% respectively. | |
Wall Street has also opened lower, with the S&P 500 and Dow Jones indexes fall about 1.3% in early trading. | |
Analysts said US Federal Reserve chair Janet Yellen's gloomy economic assessment on Wednesday had added to investors' worries. | |
In testimony to Congress, she said that financial conditions in the US had become "less supportive" of growth and warned of the "increased volatility" in global financial markets. | |
Rabobank European strategist Emile Cardon said the worst could still lie ahead: "The bad news in now coming from everywhere - China, Portugal, the US, the commodity sector, the banking sector. It's like several smaller crises could combine into one big crisis." | |
Analysis: Kamal Ahmed, economics editor | Analysis: Kamal Ahmed, economics editor |
The great sell off continues. Why? | |
It's a mix - part economic fundamentals; part market emotion, as herding investors follow each other down a negative spiral, fearful of being left beached as the tide goes out; and part brute market forces, the major trading houses looking to make a profitable turn on share prices which they bet are not going up any time soon. | It's a mix - part economic fundamentals; part market emotion, as herding investors follow each other down a negative spiral, fearful of being left beached as the tide goes out; and part brute market forces, the major trading houses looking to make a profitable turn on share prices which they bet are not going up any time soon. |
Read Kamal in full | Read Kamal in full |
Coco bonds: what are they and why have they hit bank shares? | Coco bonds: what are they and why have they hit bank shares? |
Why use negative interest rates? | Why use negative interest rates? |
On the FTSE 100, the biggest losers were a mix of financial firms and mining stocks. | On the FTSE 100, the biggest losers were a mix of financial firms and mining stocks. |
Barclays was the worst-performing bank, sliding 5.9%. Its shares have fallen by almost a third since the start of this year, leaving it worth £25bn. | |
That is about the same value as Royal Bank of Scotland, whose shares have fallen more than a quarter this year. | |
Falls in bank shares this year | |
Mining giant Rio Tinto fell 3.9% after it revealed that it had made an annual loss of £596m. | |
Fellow miners Glencore and Antofagasta shed 6.3% and 2.3% respectively. | |
However, others in the resources sector fared better, with Randgold Resources rising 7.4%, while Fresnillo added 6.8%. | |
In Paris, the bank Societe Generale was particularly hard hit, falling more than 11%. | |
The bank's shares tumbled after it said it was scrapping its target of achieving a 10% return on equity by the end of this year. | |
In Frankfurt, Deutsche Bank was down 6.3%, as its share price continued to suffer from concerns about the strength of its balance sheet. | |
Banks are under pressure across Europe because of fears that exposure to bad loans may leave them ill-prepared to cope if the global slowdown intensifies. | Banks are under pressure across Europe because of fears that exposure to bad loans may leave them ill-prepared to cope if the global slowdown intensifies. |
US banks such as Citigroup and JP Morgan also fell on Thursday, with declines of 4.5% and 3.6% respectively. | |
On the commodities markets, Brent crude was down 1% to $30.54, while US light crude fell 2.1% to $26.87. | |
On the currency markets, the pound hit a 13-month low against the euro, falling 0.9% to €1.2744. | |
The currency was also down 0.5% against the dollar at $1.4454. |