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WORLD> Europe
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World stocks at 21-month low as banks plunge
(Agencies)
Updated: 2008-07-08 21:47 MSCI main world equity index (.MIWD00000PUS) fell as low as 341.35, down 1 percent, hitting its lowest since October 2006.
The FTSEurofirst 300 index (.FTEU3) fell 2.5 percent. Wall Street was set for a weaker open with US stock futures falling half a percent. "The bottom line...is that the world does not look as healthy as place as it did three months ago," Barclays Wealth said in a note. "Given that in reality central banks have not been sitting idly by -- but instead sounding more hawkish by the day -- they likely underestimate the true hits to GDP that are around the corner." CONTAGIOUS CRISIS On Wall Street, the S&P regional bank index (.GSPBK) fell 5 percent to record low on Monday, which Bank of Scotland said highlighted a key evolution in the unraveling of the 2001-2007 global credit boom. "Initial focus was on structured products held and marketed by investment banks and the viability of structured investment vehicles. Focus going forward is likely to be on the scale of credit impairments delivered by a deteriorating economic cycle," the bank said in a note to clients. "High levels of leverage extended to both consumers and investors against a now depreciating asset (housing) alongside lax lending standards make a rise in default rates... The epicenter of the crisis therefore shifts from investment to commercial bank balance sheets." The yen -- which tends to rise in times of risk aversion given its low interest rates -- rose 0.3 percent to 106.83 yen per dollar. Emerging stocks (.MSCIEF) fell 1.7 percent to its lowest since January. Emerging sovereign spreads were steady. European government bonds drew in safe-haven demand, however persistent concerns about inflation supported yields and kept a lid on prices. The September Bund future rose 6 ticks. US light crude fell 1.6 percent to $139.14 a barrel having dropped 2.7 percent on Monday. Gold fell to $918.75 an ounce. |
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