UpdateChems stocks close lower after volatile day

09 October 2008 17:55  [Source: ICIS news]

By Mark Watts

 

LONDON (ICIS news)--European chemicals stocks dropped again on Thursday after showing signs of recovery in early trading.

 

The sector has been taking heavy losses all week as markets reacted to turmoil in the global financial system, with the Dow Jones Eurostoxx Chemicals index dropping 15% since markets opened on Monday.

 

The UK’s FTSE index closed down 1.21% after plunging 5.18% on Wednesday. Germany’s DAX was down 2.53% after closing down 5.88% a day earlier, while the French CAC index was 1.21% lower after a 6.31% loss the previous day.

 

Shares in German drugs and chemicals major Bayer were down 3.54% at €44.70, while BASF stock was down 0.28% at €28.22.

 

Shares in French specialties firm Rhodia, which fell 9.43% on Wednesday, rose by a marginal 0.70% to €8.69, while Germany's Lanxess dropped 2.50% to €14.81 after an 8% drop the previous day.

 

Germany's Wacker Chemie, whose shares suffered a 20% slump in Monday’s crash and continued their decline with a 14.2% drop on Wednesday, recovered some losses with a 5.64% rise to €76.97.

 

Head of the IMF, Dominique Strauss-Kahn said the world economy was on the “cusp of recession,” calling on countries to work in joint action to start a recovery.

 

Credit Suisse warned stocks in Europe’s chemical producers could reach historic lows in the current economic turmoil as analysts slashed price targets across the sector. 

 

Most European leveraged chemicals firms were thought to be relatively well placed to endure difficult trading conditions but may face refinancing risk in the longer term, according to Fitch Ratings.

 

The decline continued despite the Bank of England and European Central Bank (ECB) cutting interest rates by half a percentage point on Tuesday in an attempt to curb the escalating global financial crisis.

 

Central banks in the US, China, Canada, Sweden and Switzerland also cut rates as markets continued to plummet amid fears of a global recession.

 

Asian central banks followed moves by their Western counterparts, with China cutting rates by 27 basis points, South Korea by 25 bp, Taiwan by 25 bp and Hong Kong by 150 bp.

 

Iceland suspended trading on its OMX Nordic Exchange as its largest bank Kaupthing became the third financial institution to be nationalised within a week.

 

Trading on Russian stock markets was again suspended following sharp share falls earlier in the week, as stocks were climbing too high after trading resumed.

 

The US Dow Jones Industrial Average was trading flat early on Thursday following six straight session losses.

 

($1 = €0.73)

 

To discuss how the financial crisis is affecting the chemicals industry visit this thread on ICIS connect

By: Mark Watts
+44 20 8652 3214

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