European stocks fell for a third week as record short-term borrowing costs and shrinking orders to US factories deepened concern that a seizure in credit markets is pushing the global economy closer to a recession.
Bayerische Motoren Werke AG (BMW) slid 8.3 percent and Renault SA fell 14 percent as the carmakers forecast a prolonged sales slump and reports on factory orders and US manufacturing trailed estimates. BHP Billiton Ltd lost 13 percent after the Reuters/Jefferies CRB Index of raw materials posted the steepest drop since at least 1956. The rate banks charge each other for three-month loans surged after five of the region’s lenders including Dexia SA were forced into government-backed bailouts.
“The credit markets are basically shot,” Marino Valensise, who helps oversee about US$44.6 billion as chief investment officer at Baring Asset Management Ltd in London, said in an interview on Bloomberg Television.
Banks “are retaining cash and not lending. This is very dangerous for the corporate world,” Valensise said.
Europe’s Dow Jones STOXX 600 Index dropped 1.7 percent this week to 261.43, bringing its three-week tumble to 6.8 percent. It closed at the lowest since January 2005 on Monday, then recouped some of losses as banks rallied on speculation US lawmakers will pass a US$700 billion financial-market rescue package. US President George W. Bush signed the package on Friday after it was passed by Congress.
Allied Irish Banks PLC and Bank of Ireland PLC jumped more than 18 percent after the Irish parliament approved a 400 billion euro (US$550 billion) plan to protect the deposits and borrowings of six local banks.
The STOXX 600 has tumbled 28 percent this year, leaving the pan-European equity benchmark valued at 11 times its companies’ reported earnings, near the lowest since 2002.
National benchmark indexes retreated in 15 of the 18 western European markets this week. France’s CAC 40 lost 2 percent. The UK’s FTSE 100 dropped 2.1 percent, while Germany’s DAX retreated 4.4 percent.
The pound dropped the most versus the dollar since 1992 this week after speculation increased that the Bank of England will cut interest rates and the government seized Bradford & Bingley PLC, the UK’s biggest lender to landlords.
Auto markets won’t recover until at least the middle of next year, BMW chief executive officer Norbert Reithofer said on Oct. 2 at the Paris Motor Show. The world’s largest luxury-car maker may deepen production cuts if people continue to delay purchases.
Renault boss Carlos Ghosn predicted the slowdown may last two years.
Orders to US factories decreased by 4 percent, more than forecast and following a revised 0.7 percent increase in July that was smaller than previously estimated. The Institute of Supply Management’s factory index declined to 43.5, the lowest level since October 2001. A reading of 50 is the dividing line between expansion and contraction.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
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