European economic growth, already slowing as exports dwindle and stocks slide, may grind to a halt in the wake of yesterday's terrorist attacks on the US, analysts said.
European companies sell 14 percent of their exports to the US. Disruptions to business and the shaken confidence of consumers in the US may mean the economy there will shrink in the third quarter for the first time in more than eight years, increasing the possibility of the first recession in a decade.
"The timing could hardly be worse given that fears of US and global recession were already rife," said Mark Cliffe, global head of economics and strategy at ING Barings in London.
Interest rate futures contracts in Europe rallied as investors bet central banks will lower benchmark lending rates to counter the threat of recession. The rate on the three-month euro contract for September settlement dropped 13 basis points to 4.08 percent in two days, below today's three-month money market rate of 4.24 percent.
Central banks moved to reassure markets. ECB President Wim Duisenberg told the European Parliament: "The ECB and the national central banks are standing ready to support the normal functioning" of financial markets if the need arises.
The Bank of Japan added an extra ?2 trillion (US$16.8 billion) to the money market. Other Asian central banks pledged to defend their currencies and provide cash to keep markets functioning. The Swedish central bank said it had "increased its emergency preparedness."
In the US, Federal Reserve Governor Edward Gramlich said yesterday that "If credit is needed to make transactions go, the Fed will provide it."
Sales may decline at such airlines as British Airways Plc and Air France SA. The attacks raised expectations that executives will cancel travel arrangements and limit air travel for some time to come. Conferences in European cities from Barcelona to Stockholm were scrapped.
Shares in British Airways fell 21 percent yesterday. European stocks fell on concern that consumer confidence and economic growth will suffer as a result of the attacks. The Dow Jones Europe Stoxx 50 Index dropped 1 percent, or 30.86 points, to 3147.37 after shedding 6 percent of its value yesterday.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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