European stocks tumble on Fed pessimism; DAX plunges 4%
Investing.com
Published Sep 22, 2011 05:25AM ET
During European morning trade, the EURO STOXX 50 sank 4.5%, France’s CAC 40 tumbled 4.6%, while Germany’s DAX 30 plunged 4%.
In a highly anticipated move, the Fed said it would buy USD400 billion worth of long-term Treasury bonds by June 2012, while selling an equal amount of short-term debt over the same period, in a move known as ‘Operation Twist’.
However, the Fed warned of “significant downside risks to the economic outlook, including strains in global financial markets.”
European equities added to sharp losses following reports showing that German manufacturing output fell to a 24-month low in September, while manufacturing activity in the euro zone slumped to the lowest since August 2009.
Shares in the financial sector led losses, with beaten-up French lenders Societe Generale and BNP Paribas dropping 7.1% and 5.9% respectively, while Germany’s Deutsche Bank fell 4.6%.
Peripheral lenders were also sharply lower, with Spain’s Banco Santander slumping 5.5% and Italian banking giant Unicredit down 3.5%.
Meanwhile, shares of Swiss computer peripherals maker Logitech International plunged 10.2% after it cut its fiscal 2012 earnings outlook, as a strong Swiss franc was likely to weigh on results.
In London, the commodity-heavy FTSE 100 dropped 4.1% as shares in raw material producers came under pressure, amid the downbeat global outlook.
Mining giants BHP Billiton and Rio Tinto tumbled 6.35% and 7.5%, while copper producers Xstrata and Kazakhmys plunged 8.8% and 9.3% respectively after copper prices slumped to a 10-month low.
Financials also contributed to losses, with Barclays down 5% and Lloyds Banking Group dropping 4.4%.
Elsewhere, U.S. equity markets pointed to a sharply lower open. The Dow Jones Industrial Average futures pointed to a loss of 1.95%, S&P 500 futures signaled a decline of 2.1%, while the Nasdaq 100 futures indicated a 1.9% drop.
Later in the day, the U.S. was to publish its weekly report in initial jobless claims.
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Written By: Investing.com
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