UpdateEurope chems stocks take sharp downturn

15 October 2008 16:39  [Source: ICIS news]

(Releads and updates throughout)

 

LONDON (ICIS news)--European chemicals stocks plummeted in late trading on Wednesday, continuing a downward trend from earlier losses amid fears that Germany was on the brink of a recession.

 

Top think-tanks in Germany forecasted that the economic growth of Europe’s largest chemicals producer would almost grind to a halt next year, and predicted a decline in overall output in the second half of 2008.

 

Shares in Germany’s largest chemicals producers lost value after sharp gains earlier in the week.

 

Industry major BASF fell 8.38% at €28.63, while the stock of chemicals and drugs maker Bayer dropped 6.5% to €42.26.

 

Specialties producer LANXESS was trading 9.83% lower than Tuesday’s close at €15.60, and shares in fertilizer producer K+S dropped 8.53% to €40.12.

 

Germany’s Dax index dropped 5.37% amid a Europe-wide markets downturn which saw London’s FTSE lose 5.4% of its value and Paris’s CAC index fall 2.01%.

 

Citigroup earlier downgraded price targets for most of its Europe chemicals portfolio by 6-60% and predicted that things would turn "ugly" as producers were expected to lose pricing power amid a widespread economic slowdown.

 

Several markets nosedived at record levels last week before climbing on Monday after Europe’s leaders agreed on a bail-out plan to stabilise the continent’s banking sector.

 

The banking crisis was set to dominate Wednesday’s EU summit in Brussels, where the 27-member bloc was expected to rally behind the multi-billion-euro rescue scheme.

 

Green groups were fearful that the summit, originally due to focus on climate change, would derail plans to discuss environmental policy.

 

Stocks in Asia also dropped back after two days of gains, while US stocks slumped for a second day amid growing doubt that plans to bail out the nation's banks will keep the economy out of a recession.

 

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By: Mark Watts
+44 20 8652 3214

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