Investors beg leaders to act as markets fall again

 

Stock markets around the world endured yet another day of turmoil yesterday, as fears about the global economy and the deteriorating sovereign debt crisis in the eurozone continued to unnerve investors.

In London, trading was hugely volatile, with the FTSE 100 falling by as much as 2.5 per cent at times during the day before recovering to close 1 per cent down – the equivalent of a £13.4bn loss for investors in Britain's largest companies. Shares fell by 2.5 per cent in Italy, by 2 per cent in both Germany and Spain, and by 1.8 per cent in France. The US stock market also opened sharply down, with the Dow Jones Index falling by 1.5 per cent in early trading.

Safe haven assets continued to attract investors, with gold rising as high as $1,878 an ounce, a new record. US Treasury bonds and gilts issued in the UK traded at historic lows.

Trading was less chaotic than on Thursday, when markets saw larger collapses, but investors continued to complain about a lack of political leadership. "The rhetoric of policymakers has yet to translate into any definitive plans," said Richard Hunter, head of equities at stockbroker Hargreaves Lansdown. "There seems to have been little coordinated action in an effort either to spur growth or to put in place a road map for dealing with the increasingly difficult debt situation of many developed economies, most notably the US and Europe."

There was certainly little sign of members of the eurozone being prepared to put their political differences aside yesterday, with continued squabbling over Germany's refusal to countenance the launch of eurobonds, to pool the bloc's debts, and further disagreements over the detail of thesecond bail-out plan supposedly agreed for Greece at the end of July.

Many of the smaller members of the eurozone are now calling for Greece to offer more collateral in return for the bail-out, but there appears to be no agreement on how that might be arranged. Marco Valli, an economist at Italy's UniCredit Bank, said the rows were undermining political leaders' credibility with the markets.

"If you want to sell your pact to save Greece, then you should not be fighting about this," he said.

However, Graham Neilson, the chief investment strategist at hedge fund Cairn, warned that the action now required to stabilise the eurozone – in particular, an expansion of the European Financial Stability Fund, the emergency reserve – was likely to result in France losing its prized AAA credit rating. He warned: "France is likely to be downgraded either on its own metrics but more likely as a result of potentially higher EFSF costs."

That warning was echoed by Francois Fillon, the French Prime Minister, who said the launch of eurobonds could also prove to be a trigger for a downgrade. The loss of the AAA rating would be painful for France's banks and add to the pressure on banks across Europe, which continued to lose value yesterday.

In the UK, shares in Royal Bank of Scotland lost 5.4 per cent while Lloyds Bank was down 4.8 per cent. In Switzerland, the country's two biggest banks, UBS and Credit Suisse, were forced to deny market rumours that they had borrowed money from a liquidity facility offered by the US Federal Reserve. Italy's largest banks, UniCredit and Intesa Sanpaolo, also lost more than 5 per cent each, while Societe Generale of France dropped 3.4 per cent.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
a clockwork orange, stanley kubrick
film
Extras
The Tesco Hudl2: An exceptional Android tablet that's powerful, well-built and outstanding value
indybest

Life and Style
food + drinkAuthor DBC Pierre presents his guide to the morning after
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas