While you were sleeping: Europe stocks fall, car czar ruled out
Feb. 17 – Stocks fell across Europe after Japan reported an economic slump, the U.K. faced the prospect of its worst
downturn in 30 years and losses at Lloyds Banking Group’s HBOS unit drove financials lower.
The Dow Jones Stoxx 600 Index fell 1.4% to 188.67, with eight of the 10 biggest decliners either banks or insurance
companies. The U.K.’s Legal & General sank 11% amid speculation it may have to bolster capital or cut dividends. The life insurer denied a report in
the Financial Times that it was in special talks with the Financial Services Authority about setting funds aside for
defaults in its bond portfolio.
Lloyds fell 8% while Belgium’s banking and insurance group KBC Groep fell 12%, leading the European benchmark index
lower.
France’s CAC 40 fell 1.2% to 2962.22, led by a 5.3% drop in Societe Generale amid reports the French government is
considering nationalizing some financial companies. It may buy 20% of Groupe Banque Populaire and Groupe Caisse
d’Epargne, the banks in talks to merge, Bloomberg reported, citing people with knowledge of the situation.
Germany’s DAX 30 fell 1.1% to 4366.64, paced by a 7% decline in Commerzbank and a 6.5% drop for Deutsche Bank.
In London, the FTSE 100 Index declined 1.3% to 4134.75 after the Confederation of British Industry predicted the
economy will shrink 3.3% this year, worse than its previous forecast of a 1.7% contraction. The pound declined against
the U.S. dollar after the report, which stoked speculation the central bank will have room to cut rates close to zero.
The pound fell to $1.4224 against the dollar and dropped to 130.81 yen.
The yen rose on the slump in Japan’s economy and comments from the Group of Seven over the weekend that the global
downturn will persist through 2009, which heightened risk aversion.
The yen strengthened to 117.12 per euro from 118.37 and advanced to 91.75 per dollar from 91.93. The dollar gained to
$1.2765 per euro from $1.2862. U.S. markets were closed on Monday for the Presidents Day holiday.
President Barack Obama named Treasury Secretary Timothy Geithner and economic adviser Lawrence Summers to lead a task
force to revamp America’s auto industry, switching from an earlier proposal to nominate a so-called car ‘czar’ to
oversee aid to automakers.
General Motors and Chrysler are scheduled to make progress reports on Tuesday in the U.S. as a condition of the US$17
billion of loans they’ve already received from the government.
GM is seeking further concessions from labour unions and creditors as it prepares to request an increase in its
ermgency funding package, Bloomberg reported, citing people familiar with the plan. U.S. auto sales fell to a 27-year
low last month, hurting U.S automakers and their counterparts in Asia and Europe.
In Venezuela, the bolivar rose after President Hugo Chavez won a referendum allowing him to remain president
indefinitely, so long as he is elected. The bolivar rose to 5.65 per dollar from 5.80 on the unregulated market.
Crude oil fell as signs on prolonged economic weakness stoked expectations demand for fuel will slide. Crude for March
delivery fell 49 cents to US$37.02 a barrel in electronic trading on the New York Mercantile Exchange, and earlier
dipped below US$37.
Copper for delivery in three months fell 2.9% to US$3,330 a metric ton on the London Metal Exchange. Gold for April
delivery rose US$2.20 to US$944.40 in electronic trading on the New York Mercantile Exchange.
(Businesswire)