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European share markets reverse earlier gains | European share markets reverse earlier gains |
(40 minutes later) | |
Leading European share indexes have lost earlier gains of about 2% amid continuing fears over eurozone debt and the health of Europe's banks. | Leading European share indexes have lost earlier gains of about 2% amid continuing fears over eurozone debt and the health of Europe's banks. |
In early afternoon trading, London's FTSE 100 and Germany's Dax were up 0.3% while France's Cac 40 was down 2%. | |
Trading has been highly volatile. | |
Meanwhile, the French President Nicolas Sarkozy and the German Chancellor Angela Merkel have said they will meet next Tuesday to discuss eurozone governance. | |
A statement from President Sarkozy's office said the two would also discuss "other international issues". | |
French banking shares had started the day among the biggest gainers, with Societe Generale shares up 8% in morning trade, but the bank's shares were down 5% by lunchtime. | |
Rumours | |
Mr Sarkozy held emergency talks with senior ministers on Wednesday, the day France became the centre of market turbulence. | |
Rumours had swept the market that the country was about to lose its AAA credit rating and that Societe Generale was in line for a government bailout. | |
The rumours were denied by credit rating agencies, the French Treasury and Societe Generale. | |
Societe Generale chief executive Frederic Oudea said the rumours were "absolutely rubbish" in an interview with CNBC television on Wednesday after the market closed. | |
Mr Oudea also spoke to France Info radio. "People are scared," he said, "so the tiniest information touches off irrational fears. To our clients, we have to tell them that these rumours are baseless and that they can have confidence in Societe Generale." | Mr Oudea also spoke to France Info radio. "People are scared," he said, "so the tiniest information touches off irrational fears. To our clients, we have to tell them that these rumours are baseless and that they can have confidence in Societe Generale." |
The bank has asked the French market authorities to investigate the source of the rumours, which left its shares 23% lower at one point on Wednesday. | |
Some analysts have been saying that many shares have been "oversold", meaning they are now cheap at the price. | Some analysts have been saying that many shares have been "oversold", meaning they are now cheap at the price. |
Vincent Ganne, chartist at TradingSat, said the market was still too volatile and nervous for many investors: "Have we seen capitulation yet? Has the sell-off reached its paroxysm? It's not clear at this point." | Vincent Ganne, chartist at TradingSat, said the market was still too volatile and nervous for many investors: "Have we seen capitulation yet? Has the sell-off reached its paroxysm? It's not clear at this point." |
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In Italy, Finance Minister Giulio Tremonti addressed a special parliamentary session to outline his country's response to the eurozone debt crisis, which is expected to include deficit reduction measures to meet its target of balancing its budget by 2013. | |
Mr Tremonti said budget cuts next year would be "very strong", but he queried European Central Bank demands for cuts in public sector salaries and labour law reforms to make firing easier. | Mr Tremonti said budget cuts next year would be "very strong", but he queried European Central Bank demands for cuts in public sector salaries and labour law reforms to make firing easier. |
He said: "The numbers and details are under discussion. The political choice about how we focus ourselves, for 2012 and 2013, is still a political choice we have to make." | He said: "The numbers and details are under discussion. The political choice about how we focus ourselves, for 2012 and 2013, is still a political choice we have to make." |
Mr Tremonti told parliament that Italy needed to reduce its deficit of about 3.9% of national income this year to closer to 1% next year. | |
Italy's debt is the second highest in the eurozone after Greece at 120% of gross domestic product, but its deficit is among the lowest, meaning its debt is rising at a slower rate. | Italy's debt is the second highest in the eurozone after Greece at 120% of gross domestic product, but its deficit is among the lowest, meaning its debt is rising at a slower rate. |