Global stock markets slump on euro debt

| May 25, 2010 | 0 Comments
Global stock markets slump on euro debt

Stock markets across the world fell sharply today over ongoing fears about the debt crisis in the euro zone.

London’s FTSE fell below the crucial 5,000 mark today to 4,939.6 points - its lowest level for eight months.

Germany’s Dax index lost 2.7%, while France’s Cac 40 index fell 3.2%.

Earlier in the day, Asian markets also saw sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.

Hong Kong’s Hang Seng index closed down 3.47% - its biggest percentage drop in almost six months, while Japan’s Nikkei lost 3.1% to close at its lowest level since November last year.

The debt crisis in Greece has devalued the euro and sent stock markets into freefall recently but Spain is now adding to the problems after the International Monetary Fund (IMF) issued a severe warning to the Spanish economy yesterday suggesting it needs “far-reaching” reforms to ensure its recovery.

In the meantime, Spanish bank, CajaSur, was bailed out at the weekend and the Bank of Spain has taken over the running of the bank.

CajaSur, which is one of Spain’s largest regional lenders, was heavily exposed to Spain’s property market crash.

It had some €2.2 billion worth of troubled loans, according to analysts.

The news hit banking shares and there are now concerns among investors about the stability of the Spanish banking sector.

Meanwhile, Spain and Greece have already implemented tough austerity measures and Italy is the latest to announce a three-year austerity plan worth €24 billion.

Partly in anticipation of those measures, Italian consumer confidence plunged to a one-year low in May, below expectations, the ISAE research institute said.

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