European stocks continue free-fall
LONDON, Sept 17 (Reuters) – European shares fell to their lowest since May 2005 on Wednesday as investors fretted that a credit crisis would claim more victims after Lehman Brothers failed and insurer AIG had to be bailed out.
The FTSEurofirst 300 index of top European shares provisionally ended down 2.1 percent at 1,068.48 points — its lowest in more than three years. The benchmark is down more than 8 percent this week and on track for its worst week in more than six years.
Banks were the top weighted loser on the index, with HBOS slipping 19 percent, Royal Bank of Scotland down 10.4 percent, UBS falling 5.7 percent and HSBC shedding 4.6 percent.
“It’s been another volatile day,” said Darren Winder, head of macro and strategy research at Cazenove.
“There’s very little confidence in financial companies, and it’s likely to stay that way for a while. Investors can’t identify a strategy that will work.”
The credit crisis continued to hit financial institutions, with Wall Street firms Morgan Stanley and Goldman Sachs plummeting and the UK’s biggest mortgage lender, HBOS looking set to be bought.
Tuesday’s $85 billion rescue of insurer American International Group by the U.S. Federal Reserve did little to calm nerves around the world.
The cost of borrowing overnight dollars spiked above 10 percent, indicating a deep lack of trust spooking the inter-bank lending market in Europe.
Miners suffered because of a broader market sell-off and a decline in key base metals prices. BHP Billiton, Anglo American , Vedanta Resources, Kazakhmys, Xstrata, Antofagasta and Rio Tinto fell between 1 and 11 percent.