The Wall Street Journal-20080126-European Bank Shares Take Hit on Profit Worries
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Speculation that two more European financial firms will issue profit warnings dragged down the Continent's banks a day after Societe Generale unveiled $7.2 billion in losses tied to unauthorized trades.
But Asian banks, and Asian markets, posted hefty gains Friday to cap a roller-coaster week, as investors welcomed details of a tax rebate for U.S. consumers. The extra cash could boost demand for goods from Asia. The U.S. is the region's largest export market.
In Europe, Belgian-Dutch banking group Fortis slumped 11% and ING Groep dropped 5.2%, both in Amsterdam, on talk they would be the next victims of the global credit crunch. Both firms declined to comment.
"Balance sheets of the Benelux stocks may be hit by large losses on subprime assets and lower equity and real-estate prices, while margins should come down," said Jaap Meijer, banking analyst at Dresdner Kleinwort.
However, the pan-European Dow Jones Stoxx 600 index ended the day flat at 322.23, aided by gains in technology and mining stocks. Overall, it fell 1.6% during a volatile week, its seventh straight weekly decline.
In LONDON, the FTSE 100 Index slipped 0.1%, or 6.80 points, to 5869. Miners jumped after power problems halted production for many South African miners, sending gold futures soaring. Vedanta Resources surged 7.2%.
In PARIS, the CAC-40 Index shed 0.8%, or 37.17 points, to 4878.12. Societe Generale fell for the third straight day. Friday's loss of 2.6% means it has lost 21% since speculation of a large write-down first emerged just over a week ago.
In TOKYO, the Nikkei Stock Average of 225 companies rose 4.1%, or 536.38 points, its largest one-day percentage gain in nearly six years, to 13629.16, as a weaker yen aided exporters. Honda Motor rose 6.5%. Financial stocks also were big winners; Mizuho Financial Group added 11%.
In HONG KONG, the Hang Seng Index rose 6.7%, or 1583.10 points, to 25122.37, leaving the index down 0.3% on the week. Property developer Cheung Kong (Holdings) climbed 7.5% on hopes that falling interest rates would further boost demand for residential properties.
In MUMBAI, the 30-stock Sensitive Index jumped 6.6%, or 1139.92 points, its largest one-day percentage gain since June 15, 2006, to 18361.66.
In SYDNEY, the S&P/ASX 200 climbed 5%, or 279.90 points, its largest one-day percentage gain in more than a decade, to 5860.30. The index, which snapped a 12-session losing streak earlier in the week, climbed 2% for the week, the first time it has gained in four weeks. It still is down 7.6% this month.
