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Asian markets plunge but Europe's stabilise
Stock market losses deepened in Asia yesterday on pervasive global economic gloom and fears of a US recession but European bourses stabilised ahead of two key central bank decisions this week.
- Reuters
- Published: 00:14 February 7, 2008
London: Stock market losses deepened in Asia yesterday on pervasive global economic gloom and fears of a US recession but European bourses stabilised ahead of two key central bank decisions this week.
With Wall Street futures indicating a higher start for US stocks, the relative calm in Europe was also aided by fresh merger and acquisition (M&A) speculation in banking and mining sectors and some surprisingly upbeat earnings from non-financial firms.
French bank Societe Generale jumped as much as 7.8 per cent as traders speculated about a potential bid by HSBC ahead of SocGen's planned capital increase.
And persistent talk of a bid for miner Xstrata from Brazil's Vale also stoked the M&A rumour mill.
France Telecom, meantime, reported an above-forecast 3.1 per cent rise in earnings last year and raised cash flow expectations for 2008.
Nerves about full-year results from European banks continued to hit banking stocks as Germany's Deutsche Bank and Spain's Banco Santander prepare to report today.
However, hopes for an interest rate cut from the Bank of England (BoE) today and growing talk that the European Central Bank (ECB) will start to signal more concern about slowing growth helped partly offset the deep gloom over bank outlooks.
Few expect the European Central Bank to lower interest rates at its policy meeting today, but growing evidence that Europe too is feeling the effects of the US subprime crisis is stoking speculation of an ECB cut as soon as the second quarter.
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