European stocks posted their steepest weekly decline in five years on concerns that slowing growth will curb earnings at commodity producers while banks will face higher costs as the European Central Bank (ECB) tightened lending rules.
Royal Dutch Shell PLC, Europe’s largest oil company, and BHP Billiton Ltd, the world’s biggest mining company, declined as crude and metals prices slumped. Barclays PLC, the UK’s third-largest bank, led a retreat in financial shares after the ECB clampdown. Nokia Oyj plunged 17 percent after the biggest maker of mobile phones forecast a lower market share in the third quarter.
The Dow Jones STOXX 600 Index lost 5.6 percent to 272.24 this week, its biggest slump since 2003. The measure is down 25 percent this year, led by financial firms on concern accelerating inflation and more than US$500 billion in credit-related losses will stifle profits.
“Equity markets keep on suffering from mounting concerns on global growth,” said Gabriele Miodini, Italy country chief for Morley Fund Management, which oversees about US$355.6 billion in assets. “Lack of visibility on interest rates evolution in Europe with a still-high inflation offsetting a worsening economic scenario will keep markets under pressure.”
A US government report showed that unemployment rose to the highest in five years last month, signaling the economic slowdown is worsening.
The ECB on Thursday cut its economic growth forecast for this year to 1.4 percent from 1.8 percent and its prediction for next year to 1.2 percent from 1.5 percent.
National benchmark indexes declined in all 18 western European markets. Germany’s DAX slid 4.6 percent and France’s CAC 40 fell 6.4 percent. A slump in commodity producers sent the UK’s FTSE 100 down by 7 percent.
Basic-resources companies were the worst performers in the STOXX 600 as metal prices declined. BHP lost 16 percent and Anglo American PLC skidded 21 percent.
ArcelorMittal sank 19 percent in Paris. The world’s biggest steelmaker said it will cut South African prices for the first time in a year.
Royal Dutch Shell PLC dropped 9.6 percent in Amsterdam and Total SA, Europe’s third-largest oil company, slumped 9.7 percent. Sevan Marine ASA, a Norwegian oil-service company, tumbled 25 percent, the steepest decline in the STOXX 600 this week.
ECB President Jean-Claude Trichet, concerned that some banks were abusing its willingness to make loans backed by securities most investors won’t accept, said on Thursday that the central bank would increase the so-called “haircut” on securities used as collateral for loans to 12 percent from as little as 2 percent, meaning it will lend just 88 percent of their value.
Nokia tumbled after forecasting a drop in third-quarter market share as competitors slashed prices and a new handset was delayed.
STILL COMMITTED: The US opposes any forced change to the ‘status quo’ in the Strait, but also does not seek conflict, US Secretary of State Marco Rubio said US President Donald Trump’s administration released US$5.3 billion in previously frozen foreign aid, including US$870 million in security exemptions for programs in Taiwan, a list of exemptions reviewed by Reuters showed. Trump ordered a 90-day pause on foreign aid shortly after taking office on Jan. 20, halting funding for everything from programs that fight starvation and deadly diseases to providing shelters for millions of displaced people across the globe. US Secretary of State Marco Rubio, who has said that all foreign assistance must align with Trump’s “America First” priorities, issued waivers late last month on military aid to Israel and Egypt, the
France’s nuclear-powered aircraft carrier and accompanying warships were in the Philippines yesterday after holding combat drills with Philippine forces in the disputed South China Sea in a show of firepower that would likely antagonize China. The Charles de Gaulle on Friday docked at Subic Bay, a former US naval base northwest of Manila, for a break after more than two months of deployment in the Indo-Pacific region. The French carrier engaged with security allies for contingency readiness and to promote regional security, including with Philippine forces, navy ships and fighter jets. They held anti-submarine warfare drills and aerial combat training on Friday in
COMBAT READINESS: The military is reviewing weaponry, personnel resources, and mobilization and recovery forces to adjust defense strategies, the defense minister said The military has released a photograph of Minister of National Defense Wellington Koo (顧立雄) appearing to sit beside a US general during the annual Han Kuang military exercises on Friday last week in a historic first. In the photo, Koo, who was presiding over the drills with high-level officers, appears to be sitting next to US Marine Corps Major General Jay Bargeron, the director of strategic planning and policy of the US Indo-Pacific Command, although only Bargeron’s name tag is visible in the seat as “J5 Maj General.” It is the first time the military has released a photo of an active
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
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