Sun, Sep 16, 2007 - Page 10 News List

European stocks wilt on trouble at Northern Rock

AFP , LONDON

European bourses wilted on Friday, dragged down by news that the Bank of England had to rescue a troubled British mortgage lender and lackuster US economic reports.

The London FTSE 100 index fell 1.17 percent at close at 6,289.30 points, while in Paris the CAC 40 lost 0.49 percent to finish at 5,538.92. In Frankfurt the DAX shed 0.51 percent to end the week at 7,497.74 points.

The Euro STOXX 50 index of leading eurozone shares lost 0.65 percent to close at 4,221.34.

US stocks recovered from a sharply lower opening as global credit jitters were heightened by news that British mortgage lender Northern Rock had sought emergency funding from the Bank of England.

The trouble at Northern Rock raised concerns that a financial market credit squeeze, brought on by a sharp downturn in the US housing sector and heavy pressure on mortgage-backed securities, may not be over.

"The catalyst for this move is news that the Bank of England had to supply a UK mortgage lender with emergency credit," Dick Green at Briefing.com said.

"That has re-raised credit worries in the US," Green said.

In London Northern Rock plunged 31.46 percent on the day to ?4.38. Elsewhere in the sector Barclays fell 3.09 percent to ?5.96, while real estate finance specialists Paragon tumbled 16.7 percent to ?2.98.

In Paris US economic news weighed on sentiment.

The US Commerce Department said retail sales rose a weaker-than-expected 0.3 percent last month, data showed, suggesting US consumers are turning cautious in the face of housing and credit woes.

Excluding volatile auto sales, the report showed a 0.4 percent decline.

Analysts had been expecting a 0.5 percent rise in the headline figure and an increase of 0.2 percent excluding autos.

US industrial production was meanwhile reported to have risen 0.2 percent last month rather than an expected 0.3 percent.

Alcatel-Lucent fell 1.91 percent to 6.52 euros in Paris, still suffering from a profit warning issued on Thursday.

Elsewhere there were declines of 0.57 percent to 4,259.54 in Brussels, 0.49 percent to 528.36 in Amsterdam, 1.54 percent to 13,861 in Madrid, 1.19 percent to 8,772.58 on the Swiss Market Index and 0.79 percent to 39,058 in Milan.

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