European and London shares on Friday fell, erasing their early gains, while some logged their steepest weekly drop in five months as supportive measures from regulators across the US and Europe failed to allay fears over a brewing global banking crisis.
The pan-European STOXX 600 closed down 5.33 points, or 1.21 percent, at 436.31, dragged by bank, insurance and financial services stocks.
The bank index lost 2.6 percent, with HSBC Holdings PLC, BNP Paribas, Allianz SE and UBS Group AG losing 1 percent to and 3 percent.
A US$30 billion lifeline by large U.S. banks for embattled lender First Republic Bank, less than a day after battered Credit Suisse Group AG clinched a mega central bank loan, had boosted the bank index by as much as 2.2 percent earlier in the day.
Later in the day, SVB Financial filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek buyers for its assets.
“Central banks have done the right things in putting an effective backstop in place ... it’s just going to take some time,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co.
Photo: EPA-EFE
Euro zone inflation eased a touch last month, figures showed on Friday, but underlying price growth continued to accelerate on a surge in services costs.
“The core CPI is still climbing, making it unclear when the hiking cycle will end ... there are some concerns about what will these global central banks do,” Kleintop added.
The benchmark STOXX 600 lost 3.84 percent this week, with bank stocks bleeding 11.5 percent, after the US and European lenders’ meltdown left investors panicking about the financial sector’s health.
Credit Suisse, too, reversed early gains and dropped 8 percent, following a 19 percent rise in the previous session.
In London, the blue-chip FTSE 100 lost 74.63 points, 1.01 percent, to close at 7,335.40, while the mid-cap FTSE 250 lost 287.75 points, or 1.53 percent, to close at 18,470.83.
British banks fell 2.6 percent, with major lenders including HSBC, Barclays and Standard Chartered PLC down from 1.9 percent to 2.8 percent.
“The market has been flip-flopping over these bank stories about whether there can be risk of contagion from SVB or Credit Suisse,” HYCM chief market analyst Giles Coghlan said.
“They [markets] are still concerned that there’s going to be further defaults from some other unknown source,” he said.
The international-focused FTSE 100 posted its worst weekly performance, down 5.33 percent, while the FTSE 250 lost 4.58 percent for the week.
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