European stocks fell for a seventh week on concern efforts by US policymakers and regulators to stem credit-market losses won't be enough to keep the world's largest economy from sliding into a recession.
Societe Generale SA dropped the most in more than five years after saying bets on stock-index futures by a rogue trader caused a 4.9 billion euro (US$7.1 billion) trading loss, the biggest in banking history. E.ON AG and RWE AG, Germany's largest utilities, led the Dow Jones Europe STOXX Utilities Index to its worst week since September 2001 as power prices declined and EU regulators outlined tighter restrictions on emissions.
The STOXX 600 Index retreated 1.6 percent to 322.23 in the past week, the longest falling streak since October 1998. The measure slumped the most since the Sept. 11, 2001, terrorist attacks on Monday. It clawed back some losses after the Federal Reserve's emergency interest-rate cut the following day and as talks to bail out bond insurers started.
"We're on the brink of a recession in the US and the danger is that it will spill over to Europe," said Ulf Moritzen, who helps manage the equivalent of US$8 billion at Nordinvest in Hamburg. "If the world's biggest economy goes down, all are affected."
The Fed lowered its benchmark lending rate by 0.75 percentage point to 3.5 percent on Tuesday. New York State regulators met with banks Wednesday to ask them to extend capital to bond insurers and stave off credit-rating reductions. A rescue would need to be arranged before Moody's Investors Service and Standard & Poor's complete their reviews in the next few weeks.
"The Fed is starting to realize just how serious the situation is and, at last now, is in front of the curve," said Jonathan Monk, a fund manager at Aerion Fund Management in London, which oversees about US$23 billion.
National benchmarks fell in 12 of the 18 western European markets. Germany's DAX Index slumped 6.8 percent in the week and France's CAC 40 decreased 4.2 percent. The UK's FTSE 100 lost 0.6 percent. The STOXX 50 dropped 3.2 percent. The Euro STOXX 50, a measure for the euro region, retreated 5.5 percent.
Societe Generale sank 13 percent, the biggest weekly decline since the week ended Oct. 4, 2002. France's second-largest bank said Jerome Kerviel, 31, was the trader responsible for the trading loss. Kerviel secretly set up unauthorized positions, going beyond permitted limits on futures linked to European stock indexes, Societe Generale said.
E.ON, Germany's largest utility, lost 13 percent, the steepest drop since the week ended Oct. 2, 1998. RWE, the second-biggest, decreased 12 percent.
The STOXX Utilities Index lost 7.1 percent, the worst drop since the week of the Sept. 11 terrorist attacks.
Electricity for next year in Germany, Europe's biggest power market, had fallen 6.7 percent as of Wednesday from a Jan. 8 record of 63.25 euros a megawatt-hour, following declines in fuel and emission permits. Dutch prices also slid 6.7 percent in the period.
The EU will probably make its 2020 greenhouse-gas reduction target stricter, requiring emission cuts of 30 percent from 1990 levels, because nations will reach a new climate-protection agreement, an official said.
Gaz de France SA, owner of Europe's largest natural-gas network, retreated 8.3 percent.
Sanofi-Aventis SA, France's largest manufacturer of pharmaceuticals, and GlaxoSmithKline Plc, the world's second-biggest, declined after regulatory setbacks.
Sanofi fell 9.3 percent. The company's experimental stroke drug Idraparinux caused more bleeding in some patients than a standard treatment in a study stopped ahead of schedule in 2005, researchers writing in the Lancet said.
Glaxo dropped 7.8 percent. The company's Avandia diabetes pill shouldn't be prescribed for patients with some heart conditions, European regulators said on Thursday.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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