LONDON, Sept 17: Europe’s main stock markets wobbled for a second straight trading day on Monday as banking share prices extended heavy losses led by troubled Northern Rock.
Britain’s fifth-biggest mortgage lender again lost almost one third of its share-price value as customers rushed to empty savings accounts at Northern Rock, which has fallen victim to a global credit squeeze.
It’s all about the banks, having seen investor panic over the weekend with Northern Rock depositors withdrawing an estimated 2.0 billion pounds (2.9 billion euros, 4.0 billion dollars) out of the bank, said Mark Priest, head of equity sales at Tradindex.
With reports of the problem being bigger than expected, we are not going to see anything but selling. The market has also been swayed by comments made by (former chairman of the US Federal Reserve Alan) Greenspan on the UK housing market, saying it is inevitable the boom time has come to an end, added Priest.
London’s FTSE 100 index of leading shares, on which Northern Rock trades, dropped 1.56 percent to 6,191.20 points in late morning trade.
Frankfurt’s DAX 30 shed 0.66 per cent to 7,448.46 points and in Paris, the CAC 40 lost 1.58 per cent to stand at 5,451.26.
The DJ Euro Stoxx 50 index slipped by 1.00 per cent to 4,179.32 points.
The euro stood at 1.3868 dollars. In morning trade, the share price of Northern Rock plunged 32.8 per cent to 294.5 pence.
Northern Rock’s market value has slumped by more than half to about 1.2 billion pounds from 2.69 billion pounds at the close of trade last Thursday.
The bank’s share price had closed down 31.46pc on Friday after the BoE agreed to an emergency lending facility.
US broker Merrill Lynch cut its stance on Northern Rock to ‘neutral’ from ‘buy’ following Friday’s news that the Bank of England had offered it an emergency lending facility.
Northern Rock’s peers also fell heavily on Monday. In London, Alliance and Leicester tumbled by 14.2pc to 749 pence. In Paris, BNP Paribas shed 3.27pc to 71.31 euros, while Deutsche Bank lost 1.98pc to 88.19 euros in Frankfurt.—AFP