UK hits bear market as stocks dip

08/07/2008| IslamWeb

Asian and European stock indexes have fallen amid concerns about the state of the world economy and the impact slower growth will have on company earnings.

The UK's FTSE 100 index fell below 5,385 points in early trading, 20% below its June 2007 peak of 6,732.

 

The UK market was thus briefly in bear territory, often defined as a 20% fall from a stock index's recent peak, even though it then bounced back to 5445.

 

Analysts have warned that markets are set to be volatile in coming months.

 

Bear territory

 

Markets elsewhere in the world have also fallen as investors' confidence has been hit.

 

The Cac 40 index in Paris was down 1.75% in early afternoon trading, as was Frankfurt's Dax index.

 

European markets tracked earlier slides on Wall Street and in Asia on fears about the health of the fragile US economy.

 

Hong Kong's Hang Seng index and Japan's Nikkei both fell by about 2.5%.

 

Risks

 

The G8 group of industrialised nations, meeting in Japan, voiced strong concern about surging food and oil prices, which they said posed risks for a global economy strained by the credit crunch.

 

In the UK banks were among the biggest fallers, with beleaguered lender Bradford & Bingley plunging more than 20% on continued concerns about its fund-raising plans.

 

US markets fell on Monday on fears that two of the country's biggest mortgage providers would have to raise even more money to strengthen their balance sheets.

 

Some key US firms start unveiling their latest quarterly results this week and some analysts believe that bank earnings will sustain further hits from a lingering credit crunch.

 

"Everyone is reassessing the widely-held view that the worst of the credit crisis would be over by now, and coming to the same conclusion: The worst may not be over and it might last well into 2009," said Ed Yardeni of Yardeni Research.     

 

 

 

PHOTO CAPTION:

London shares opened sharply lower following Asia's lead

 

 

BBC