BANGKOK (AP) — World stocks fell Wednesday after a meeting of Europe’s finance ministers failed to stem fears that the euro currency union is hurtling toward a breakup. Banking stocks slumped after some of the world’s top financial institutions were slapped with a credit rating downgrade.
European shares headed south in early trading. Britain’s FTSE 100 fell 0.8 percent to 5,296.40. Germany’s DAX shed 0.7 percent to 5,760.28 and France’s CAC-40 lost 0.6 percent to 3,007.73. Wall Street was also headed for a lower opening. Dow Jones industrial futures fell 0.6 percent to 11,501 and SP 500 futures were 0.6 percent lower at 1,189.40.
Sluggish trading began earlier in the day in Asia, where Japan’s Nikkei 225 index dropped 0.5 percent to close at 8,434.61. South Korea’s Kospi dropped 0.5 percent to 1,847.51. Hong Kong’s Hang Seng dipped 1.5 percent to 17,989.35. Australia’s SP/ASX 200 swung back and forth until settling 0.4 percent higher at 4,119.80.
Mainland Chinese shares plummeted, with the benchmark Shanghai Composite Index falling 3.3 percent to 2,333.41. The Shenzhen Composite Index dropped 4 percent to 994.02.
Sentiment was dented after a meeting in Brussels of finance ministers from the 17 countries that use the euro ended without an announcement on plans to contain the debt crisis that is threatening to shatter the currency union.
The ministers sent debt-riddled Greece euro8 billion ($10.7 billion) to stem an immediate cash crisis, but they kicked more difficult issues — such as whether countries should cede some control over their finances to a central European authority — to the leaders of the European Union who meet next week.
In the latest sign of trouble, Italy was forced to pay a high interest rate on an auction of three-year debt Tuesday. The 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase.
If Italy were to default on its debt of euro1.9 trillion ($2.5 trillion), the fallout could spell ruin for the euro common currency and send shock waves through the global economy. Such a prospect has left little appetite for risky assets.
Analysts at Credit Agricole CIB said in a report that “until concrete and detailed plans for a solution to the crisis are announced, the downward trend” in stocks will continue.
Ratings downgrades for many of the world’s largest banks also drove investors to the sidelines, analysts said. Standard Poor’s on Tuesday lowered its credit ratings for 37 financial companies, including Bank of America Corp., Citigroup Inc. and HSBC Holdings PLC.
Hong Kong-listed Industrial Commercial Bank of China, the world’s largest bank by market value, fell 2.3 percent. Japan’s Mizuho Financial Group lost 1 percent and Hong Kong shares of British bank HSBC Holdings fell 2.6 percent.
Insurance companies also fell. Hong Kong-listed China Life Insurance Co., the country’s biggest life insurer, lost 3.5 percent. Ping An Insurance fell 5.3 percent. Japan’s Tokio Marine Holdings shed 0.9 percent.
Among mainland Chinese shares, securities, nonferrous metals, media, cement and auto companies weakened. More than 20 companies plunged 10 percent.
“It was panic selling,” said Liu Kan, an analyst at Guoyuan Securities, based in Shanghai.
Investors were worried over an increase in sales of non-tradable shares in December as lockup periods expire and the possible launch soon of international shares in Shanghai. Officials of the Shanghai Stock Exchange denied rumors of an imminent launch of an international board in Shanghai, where only Chinese companies’ shares are now traded.
Shanghai-listed Founder Securities Co. lost 8.1 percent while China Merchants Securities Co. lost 4.5 percent, its lowest close in two years.
On Wall Street on Tuesday, a jump in U.S. consumer confidence sent stocks modestly higher. The Dow Jones industrial average rose 0.3 percent to close at 11,555.63. The Standard Poor’s 500 index rose 0.2 percent to 1,195.19. The Nasdaq composite, which consists mostly of technology stocks, fell 0.5 percent to 2,515.51.
The Conference Board, a private research firm, said its Consumer Confidence Index climbed 15 points in November to 56.0 — an improvement, but still well below the level of 90 that indicates an economy on solid footing.
Benchmark crude for January delivery was down 66 cents to $99.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to settle at $99.79 on Tuesday.
In currency trading, the euro slipped to $1.3269 from $1.3331 late Tuesday in New York. The dollar was nearly unchanged at 77.92 yen from 77.93 yen.
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AP researcher Fu Ting contributed from Shanghai.
Article source: http://www.nytimes.com/aponline/2011/11/29/business/AP-World-Markets.html?partner=rss&emc=rss