Europe chem stocks suffer as financial markets fall

16 September 2008 16:16  [Source: ICIS news]

By Hilde Ovrebekk

LONDON (ICIS news)--Shares in European oil and chemicals companies fell on Tuesday as indexes plunged on worries about the credibility of the global banking system.

The biggest loser of the chemicals companies listed on the UK's FTSE 100 was Johnson Matthey, which saw its shares fall 6.44% to 1,352 pence.

Shares in BP were down 3.26% at 475.50 pence at 13:44 GMT, while Shell’s shares dropped 4.25% to 1,578 pence.

The Dow Jones Eurostoxx 50 index had fallen by 2.67% to 3,066.95 at 13:53 GMT, with BASF’s shares down 2.40% at €35.37, Air Liquide down 1.29% at €83.06 and Total down 3.38% at €41.94.

NYMEX light sweet crude futures fell by more than $5/bbl on Tuesday as oil market players focused on the latest developments in the banking industry, overlooking events such as a weak dollar and production disruptions, that normally would provide support.

By 14:20 GMT, October NYMEX crude had hit a low of $90.55/bbl, a loss of $5.16/bbl from the Monday close of $95.71/bbl, before recovering to around $92.90/bbl.  

In the UK, the FTSE 100 fell 209.50 points, or 4.03%, to below 5,000 for the first time since June 2005, before recovering slightly.

Shares in HBOS, owners of the UK’s biggest mortgage lenders Halifax, had plunged 32.04% to 158 pence by 13:41 GMT on Tuesday on worries about its reliance on financing from the wholesale money markets.

The cost of borrowing on those markets has risen sharply as banks have become even more careful about lending following the collapse of Lehman Brothers.

Royal Bank of Scotland’s shares dropped 25.34% to 179 pence, while Barclays had 16.41% wiped off the value of its stock, taking it to 293 pence.

The world’s biggest insurance group American International Group (AIG), saw shares plummeting 70% to $1.31 as Wall Street opened for trading, after a plunge of more than 60% on Monday.

AIG was given emergency access to $20bn (€14bn) of funds on Monday, with Goldman Sachs and JP Morgan trying to raise a $75bn financing package to support the insurer in coordination with the US Federal Reserve after three credit agencies slashed the company’s ratings.

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By: Hilde Ovrebekk
+44 20 8652 3214

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