Royal Bank of Scotland, sued by US, down 12 percent
European equities markets were significantly lower Monday after German Chancellor Angela Merkel’s Christian Democratic Union party lost an election in her home state to the Social Democrats, with how Chancellor Merkel handled the European debt crisis as a key issue in the campaign, while banks were lower across Europe after the United States sued 17 banks over the sale of mortgage-backed securities.
The FTSE 100 was 3.58 percent lower to 5,102.58 in London, while the FTSE 250 was 2.86 percent lower to 10,084.1 as the banking sector declined steeply.
Royal Bank of Scotland Group (LSE: RBS), one of the seventeen banks sued by the US, was the worst performer in the banking sector and on the 100 as it dropped 12.32 percent, while Lloyds Banking Group (LSE: LLOY) was down 7.46 percent and Barclays Bank (LSE: BARC) was 6.69 percent lower, and even the best performing bank in the sector, HSBC Holdings (LSE: HSBA) dropped 3.81 percent.
Randgold Resources (LSE: RRS) was the only gainer on the 100 and one of just two miners seeing an advance, adding just 0.97 percent, while Kenmare Resources (LSE: KMR) was down 8.56 percent as the worst performer in the sector and copper miner Antofagasta (LSE: ANTO) dropped 5.15 percent after Citigroup downgraded it from “hold” to “sell”.
Over on the 250, digital rights business Perform Group (LSE: PER) led gains as it added 4.91 percent, while computer hardware and software group Kofax (LSE: KFX) was down 17.07 percent to lead declines on that index.
House builder Berkeley Group Holdings (LSE: BKG) was up 4.83 percent in a mostly lower sector after it said it could reach its goal to double pre-tax profits two years ahead of schedule on better sales.
Oil explorer EnQuest (LSE: ENQ) was the worst performer in an all-lower energy sector, dropping 10.35 percent as 7 sector constituents were down 5 percent or more.
Pubs operator Enterprise Inns (LSE: ETI) was down 9.06 percent as the worst performer in a mostly-lower travel and leisure sector, while the insurance sector was mostly lower, led by a 6.29 percent decline for Legal and General Group (LSE: LGEN).
The FTSE Eurofirst 300 was down 3.83 percent to 912.29, while the CAC-40 fell 4.73 percent to 2,999.54, the IBEX was 4.69 percent lower to 8,066.5 and the Dax dropped 5.28 percent to 5,246.18.
Banks were the biggest decliners on both the Dax and the CAC-40, with Deutsche Bank (FWB: DBK) down 8.86 percent on the Dax while Societe Generale (Euronext: GLE) dropped 8.64 percent on the CAC-40, with neither index seeing any gains.
Markets in Asia and the Pacific region were lower after the US Labor Department reported last week that the job market in the US stagnated in August, causing concerns that the US could head back into recession.
The concerns about the US economy hurt exporters in Tokyo, where the Nikkei 225 was down 1.86 percent to 8,784.46, while the Topix index was 1.81 percent lower to 755.82 and the Mothers market dropped 0.52 percent to 443.74.
Carmakers were lower, with Toyota Motor (TYO: 7203) down 2.62 percent while Honda Motor was 4.71 percent lower on concerns about sales in the United States.
Construction machinery manufacturer Komatsu (TYO: 6301) dropped 5.4 percent on a broker downgrade from “buy” to “hold” after its markets hare in China declined, while Hitachi Construction Machinery (TYO: 6205) was 5.4 percent as well.
Fast Retailing (TYO: 9983) was down 1.7 percent after sales at its Uniqlo clothing stores were down, with same-store sales reported down 9.4 percent in August.
India’s Sensex was down 0.64 percent to 16,713.3, the Shanghai Composite fell 1.96 percent to 2,478.74, Australia’s markets were lower as the Sydney Ordinaries dropped 2.25 percent to 4,224.2 and the S&P/ASX200 was 2.38 percent lower to 4,141.9, the Straits Times Index was down 2.46 percent to 2,773.17 in Singapore, Taiwan’s Taiex fell 2.65 percent to 7,551.57, the Hang Seng was 2.95 percent lower to 19,616.4 in Hong Kong, and South Korea’s Kospi dropped 4.39 percent to 1,785.83.
New York markets were closed in observance of the Labor Day holiday in the United States.
Gold was higher in electronic trade on the Globex exchange, adding $26.70 to $1,903.60 per troy ounce at midday in New York, while silver dropped 4 cents to $43.03 per troy ounce.
Copper was down $116 to $8,960 per tonne on the London Metal Exchange, although trade volumes were very low due to the holiday in the United States.
Crude oil prices were also lower, with Brent crude down $1.86 to $110.47 per barrel on the ICE Futures Europe exchange in London.