Europe stocks tumble after German bank bailout

06 October 2008 10:12  [Source: ICIS news]

LONDON (ICIS news)--A €50bn ($68bn) lifeline to German banking group Hypo Real Estate did little to calm investors’ nerves on Monday as stocks in Europe plummeted shortly after the start of trading.

 

The Dow Jones Eurostoxx 50 dropped by over 4.23% from Friday’s close, while Germany’s Dax index slipped 4.16% and London’s FTSE 100 fell 2.18%.

 

Among Europe’s largest chemical stocks, Germany’s BASF fell 3.28% to €32.17. Bayer was down 3.92% to €49.76, while Dutch coatings firm Akzo Nobel saw shares fall 3.49% to €33.78.

 

Stock markets opened after Hypo Real Estate secured a crucial €50bn credit line from the German government and private finance, the latest in a series of government-led bailouts of financial institutions in Europe.

 

Germany's government has also announced an apparent 100% guarantee for all private bank deposits, the details of which have yet to be outlined.

 

French President Nicholas Sarkozy on Saturday called for a global summit to be held to implement “a real and complete reform of the international financial system”.

 

Earlier, stocks in Asia also tumbled, as the MSCI Asia Pacific Index lost 3.6% and Japan’s Nikkei 225 fell 4.25%.

 

On Friday the US Dow Jones Industrial Average fell by 157.47 points to close at 10,325.38, wiping out earlier gains as a cascade of bad economic news offset the passage of a $700bn bailout bill.

 

($1 = €0.73)

 

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By: Mark Watts
+44 20 8652 3214

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