Europe chems stocks fall on US bailout failure

30 September 2008 10:11  [Source: ICIS news]

LONDON (ICIS news)--Chemicals stocks in Europe dropped on Tuesday as the markets reacted to the rejection by the US Congress on Monday night of Treasury Secretary Hank Paulson's $700bn (€486bn) bailout plan.

The FTSE 100 index of UK companies slumped 2.3% in early trading to 4705.5, its lowest point since December 2004, before recovering to 4,824.74 at 08:06 GMT, up 0.12% on Monday’s close.

The FTSE 100 endured one of the biggest one-day falls in history on Monday, when it dropped 5.3%.  

Shares in UK oil major BP were 1.61% down at 08:07 GMT at 459.50 pence.

At the same time, shares in chemicals firm Johnson Matthey fell 1.26% to 1,337 pence, while oil and chemicals firm Shell’s shares dropped 2.16% to 1,540 pence.

The Dow Jones Eurostoxx 50 index was down 0.43% from the previous close at 08:08 GMT to 2,995.33.

German chemical major BASF’s shares fell 1.01% to €33.30, while pharmaceuticals and chemicals firm Bayer’s stock was down 0.38% to €52.03.

French oil major Total’s shares were down 0.65% at €41.42, while shares in industrial gases firm Air Liquide dropped 0.5% to €77.61.

Markets in Europe were expected to plummet after the shock defeat of the massive US rescue plan, which provided a mechanism for banks to unload illiquid assets.

This sent the Dow Jones industrials tumbling nearly 780 points, or about 7%, on Monday and sparked a heavy sell down in Asia.

The rescue plan was hastily crafted over the weekend following the major shake-up in the US financial sector, which saw the collapse of Lehman Brothers, the takeover of Merrill Lynch by Bank of America and the $85bn rescue of American International Group in just a week.

The list of casualties continued to grow, with the seizing of Washington Mutual last Friday and the government-orchestrated sale of Wachovia Group, the sixth largest bank in the US, to Citigroup.

European financial institutions were reeling from the US crisis, with the part-nationalisation of UK mortgage lender Bradford & Bingley and Belgian-Dutch financial institution Fortis on Monday.

($1 = €0.69)

To discuss issues facing the chemical industry go to ICIS connect

 

By: Hilde Ovrebekk
+44 20 8652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly