European markets drop after Nikkei slump
LONDON -- European stocks traded lower Thursday, following drops in Asia that saw Tokyo's Nikkei index fall 11%.
In London, the FTSE 100 index was down 3.21% and had fallen below the 4,000 level in early afternoon trading. In Paris, the Cac 40 index was off 3.94%. In Frankfurt, the Dax had dropped 2.68%.
The lower trading in European shares came as:
• Switzerland became the latest European government to roll out a plan to rescue its banks. UBS, the biggest bank in a country known for its banking stability, will take $5.3 billion from the government and lay off $60 billion in bad assets to the country's central bank.
• Leaders of the 27-member European Union prepared to call for a coordinated supervision of the bloc's financial system and a crisis unit to help manage financial turmoil, Reuters reported. The leaders, meeting in Brussels, also said an international summit later this year should take quick steps on standards of regulation and transparency in the world banking and investing.
Earlier in the week, European shares rose on optimism that bank rescue plans by Britain, Germany, France and the United States would stave off a global financial meltdown. But they haven't staved off worries that the globe is slipping into recession.
U.S. stock futures, however, were pointing higher after Wednesday's big drop.
The latest bout of selling in the markets was stoked by a record percentage fall on Wall Street Wednesday after weaker-than-expected U.S. retail sales data and a downbeat assessment from the U.S. Federal Reserve indicated that the world's largest economy is already, or about to fall, into recession.
"Once again a market rally is brought to a juddering halt by dramatic falls across global markets," said Matt Buckland, a dealer at CMC Markets.
"The persistent fear of a global recession shrugged off the cheer about banking rescue plans in the previous session with the Dow down 7.9% and the S&P500 off 9%, their worst one-day percentage falls since 1987, as U.S. retail sales were weaker than expected and the Fed's Beige Book showed weakening economic activity across the country," he added.
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