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World stocks plummet on banking, retailing fears

 An investor walks in front of the stock price monitor at a private securities company Wednesday, Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai...
 An investor looks at the stock price monitor at a private securities company Wednesday Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai Composite...
 An investor looks at the stock price monitor at a private securities company Wednesday, Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai Composit...
 Broker Simone Wallmeyer is seen under the curve of German stock index DAX at the stock market  in Frankfurt, central Germany, Wednesday, Jan. 14, 200...
 Chart shows performance of stock markets around the world; 1 c x 5 1/8 in; 46.5 mm x 130.175 mm

China Markets

An investor walks in front of the stock price monitor at a private securities company Wednesday, Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai...

China Markets

An investor looks at the stock price monitor at a private securities company Wednesday Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai Composite...

China Markets

An investor looks at the stock price monitor at a private securities company Wednesday, Jan. 14, 2009 in Shanghai, China. Benchmark Shanghai Composit...

APTOPIX Germany Markets

Broker Simone Wallmeyer is seen under the curve of German stock index DAX at the stock market in Frankfurt, central Germany, Wednesday, Jan. 14, 200...

WORLD STOCK

Chart shows performance of stock markets around the world; 1 c x 5 1/8 in; 46.5 mm x 130.175 mm

European and U.S. stock markets plummeted Wednesday in reaction to dismal U.S. retail sales data and renewed concerns over the financial well-being of the banking system.
Shares on Wall Street fell upon opening, pushing European indexes to close deep in the red, after a report showed U.S. retail sales fell 2.8 percent in December from the previous month, more than twice the 1.2 percent decline expected by analysts.
Even though around a half of the decline was due to the impact of falling gasoline prices on gas station sales, the markets were spooked by the extent to which American consumers, who account for some 20 percent of the world economy, reined in spending over the crucial Christmas trading period despite heavy discounting by businesses.
The FTSE 100 index of leading British shares closed down 5.1 percent at 4,175.45, while Germany's DAX fell 4.6 percent at 4,422.35. France's CAC-40 closed down 4.6 percent at 3,052.00.
On Wall Street, the Dow Jones industrial average slid 255.75 points, or 3.0 percent, to 8,192.81, while the broader Standard & Poor's 500 index fell 28.18, or 3.2 percent, to 843.61.
"The rally (in the markets) before Christmas and over the Christmas period was predicated on there being a recovery in the second half of the year, but I think you can write this year off in terms of an economic recovery," said Neil Mackinnon, chief economist at ECU Group in London.
The economic and corporate news across the world has been dire in the early days of 2009, with trade on the slide and businesses slashing jobs.
The financial health of the world's banks resurfaced as a major concern in markets Tuesday with the confirmation that Citigroup Inc. is to merge its Smith Barney brokerage into a joint venture with Morgan Stanley, relinquishing control in exchange for $2.7 billion in badly needed cash.
Royal Bank of Scotland PLC, which is now majority-owned by the British government, also said it was raising around 1.7 billion pounds ($2.5 billion) by selling its 4.3 percent stake in Bank of China.
In addition, analysts at Morgan Stanley said HSBC PLC, Britain's biggest bank by market capitalization, may have to raise $20-30 billion and halve its dividend to plug a capital shortfall as earnings deteriorate by more than anticipated.
"While HSBC is winning market share, we do not think this will be enough to offset the negative cyclical and structural trends," Morgan Stanley's analysts said in a statement.
HSBC's shares fell 8.0 percent, while Barclays PLC slumped a massive 14.4 percent after it confirmed that it was cutting 2,100 employees from its retail and commercial banking arm. Royal Bank of Scotland fared even worse, down 18.4 percent, despite its modest fundraising.
Meanwhile, Deutsche Bank AG, Germany's biggest bank, reported a


Updated : 2020-12-02 18:31 GMT+08:00