Rate cuts fail to revive ailing European markets

06 November 2008 16:54  [Source: ICIS news]

LONDON (ICIS news)--Major rate cuts by Europe’s two main central banks on Thursday were not enough for investors to regain confidence as markets plunged throughout the region.

 

While the Bank of England lowered UK interest rates by an unprecedented 1.5 percentage points to 3%, the International Monetary Fund (IMF) released figures indicating that the global economic downturn to be significantly worse than previously thought.

 

The IMF said developed economies as a whole could shrink by 0.3% next year, having predicted growth of 0.5% less than a month ago, making it potentially the first annual lapse in advanced economies since the Second World War.

 

The Bank of England cut was followed by a 50 basis point rate-cut by the European Central Bank, which failed to reignite confidence in nervous investors.

 

The Dow Jones Eurostoxx 50 index had dropped 5.34% in afternoon trading (4.03 GMT), while London’s FTSE 100 was down 5.27% and Germany’s DAX indicator had fallen 6.43%.

 

Stocks in the chemicals sector fell in line with the general slump, with the Dow Jones Eurostoxx Chemicals index slumping 5.85%.

 

German major BASF’s shares were down nearly 8% at €25.73, while Bayer’s stock fell 4.6% to €41.38 and Akzo Nobel dropped 5% in value to €30.31.

 

The only major European chemicals company to significantly buck the trend was Altana. Its shares shot up over 37% to €12.95 as Germany’s richest woman Susanne Klatten launch a bid increase her stake in the specialty chemicals producer.

 

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By: Mark Watts
+44 20 8652 3214

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