Europe stocks plunge further on recession fears European stocks fell, sending the Dow Jones Stoxx 600 Index to its worst three-day retreat since October 1987, on concern a coordinated interest-rate cut by six central banks won't prevent a global recession.
Royal Ahold NV, the Dutch owner of the US Stop & Shop chain, dropped 6.6% as American retailers including J.C. Penney Co. forecast profit below analysts' estimates. BHP Billiton Ltd., the world's biggest mining company, sank 11% and BP Plc lost 6.8% as metals and oil slumped. Barclays Plc declined 2.4% even after British banks got a 50 billion-pound ($129 billion) government lifeline and emergency loans from the central bank. The Stoxx 600 dropped 6% to 226.22, bringing its three-day retreat to 13%. The European benchmark index pared early losses of as much as 7.8% after the Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden's Riksbank each reduced their benchmark rates by half a%age point. ``Today's coordinated interest-rate cut will help address this problem, but more will be needed,'' said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which manages about $US125 billion. ``Confidence has been severely dented by recent events and the outlook for growth has deteriorated badly.'' The Stoxx 600 has tumbled 38% this year after the collapse of the US subprime-mortgage market spurred a retreat from high-risk debt and saddled global financial companies with more than $US590 billion ($882 billion) of credit losses and asset writedowns. The gauge closed today at the lowest level since December 2003 as all 18 industry groups retreated. Cutting forecast The International Monetary Fund raised its estimate of losses tied to US loans and securitized assets to $US1.4 trillion yesterday from $US1.3 trillion two weeks ago. The lender cut its forecast for global growth next year to 3% from an April prediction of 3.7%, according to the draft of its latest World Economic Outlook. The euro-area economy won't start expanding again until the first quarter, according to the Munich-based Ifo Institute. National indexes fell more than 4% in all 18 western European markets except Iceland and Portugal. Germany's DAX slipped 5.9%. The UK's FTSE 100 declined 5.2%, while France's CAC 40 sank 6.3%. Ahold slumped 6.6% to 7.48 euros. Tesco Plc, the UK's biggest supermarket company, lost 3.1% to 381.1 pence. J.C. Penney, Kohl's Corp. and Nordstrom Inc. forecast third-quarter profit that may trail analysts' estimates after September sales fell because of consumer concerns that the Wall Street meltdown will cost them their jobs and savings. Commodities drop BHP Billiton dropped 11% to 972.5 pence. Anglo American Plc, the world's fourth-largest diversified mining company, declined 8.7% to 1,420 pence. Copper, the metal used in wires and pipes, declined 6% to $US5,295 a metric ton on the London Metal Exchange. Aluminum, nickel, tin, zinc and platinum also retreated. Crude oil for November delivery fell 3.9% to $US86.59 a barrel in New York. It dropped as much as 4.5% earlier to $US86.05, the lowest since Dec. 6, 2007. BP, Europe's second-biggest oil company, slipped 6.8% to 417 pence. Royal Dutch Shell Plc, the region's largest, declined 5.8% to 18.80 euros. Barclays, the UK's second-biggest bank by market value, retreated 2.4% to 278.25 pence. UK Prime Minister Gordon Brown's government will invest about 50 billion pounds in an unprecedented step to prevent a collapse of the UK banking system. Buying shares As part of the plan, the government will buy preference shares, and the Bank of England will make at least 200 billion pounds available for banks to borrow under the so-called special liquidity plan, the Treasury said in a statement. The government will also provide a guarantee of about 250 billion pounds to help refinance debt. The Stoxx 600 was valued at 9.44 times the reported earnings of companies in the index today, the cheapest since Bloomberg began compiling the data in January 2002. The MSCI World was valued at 12.4 times profit yesterday, the cheapest since at least 1995, while the S&P 500 traded for 19 times earnings. The Fed's decision today brought its benchmark rate to 1.5%. The ECB's main rate is now 3.75%; Canada's fell to 2.5%; the UK's rate dropped to 4.5%; and Sweden's rate declined to 4.25%. China cut interest rates for the second time in three weeks, reducing the main rate to 6.93%. ``The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability,'' according to a joint statement by the central banks. ``Some easing of global monetary conditions is therefore warranted.'' --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
