Europe shares slide as bank crisis fear grow
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Crisis...Trading in Fortis shares was suspended on Euronext Amsterdam. (Reuters: Sebastien Pirlet )
European shares have plunged 4 per cent in early trade, with concerns about the health of the financial sector intensifying over the weekend as more banks faced troubles.
A $US700 billion package to rescue the US financial sector, passed by the US House of Representatives on its second try on Friday and signed by President George W Bush into law, also failed to cheer investors.
About 6:00pm AEDT, the FTSEurofirst 300 index of top European shares fell 4.2 per cent to 1,044.
The benchmark index lost 1.4 per cent last week and is down more than 30 per cent so far this year.
Banks took the most points off the index, with BNP Paribas down 4.2 per cent, Credit Agricole falling 6 per cent, Dexia slipping 12.8 per cent and Societe Generale shedding 6.9 per cent.
Commerzbank tumbled 15.7 per cent on big volumes.
"It's a miserable state of affairs. And then you add to that the banking problems we've seen over the weekend," strategist at Barclays Stockbrokers Henk Potts said.
"There's the bailout plan, which is good news, but there's uncertainty over the price at which assets are going to be bought. And the reality is that it will take some time to see the benefit."
Concerns mounted that the rescue package alone might not stave off a US recession.
BNP Paribas, France's biggest listed bank, said it was paying 14.5 billion euros ($US20.1 billion) to take control of European financial group Fortis.
Trading in Fortis shares was suspended on Euronext Amsterdam.
Germany also offered a blanket bank deposit guarantee and South Korea pledged to use its $US240 billion in official reserves to help its banks secure enough foreign-currency liquidity.
"European governments are looking to stabilise the financial sector by attempting to rescue some major institutions. Whilst their actions are understandable, the smell of desperation remains strong," senior sales manager at ODL Securities Chris Hossain said.
During the weekend, German officials clinched a renewed rescue deal for property lender Hypo Real Estate and UniCredit, Italy's second-biggest bank, announcing plans to raise new capital.
But Hypo Real shares slumped 48 per cent.
Across Europe, Germany's DAX index fell 4.5 per cent, UK's FTSE 100 index slipped 4.9 per cent and France's CAC 40 shed 4.8 per cent.
- Reuters
