European stocks declined for a second week as higher oil dimmed the earnings outlook for automakers and retailers and concerns deepened that banks will report more losses.
Bayerische Motoren Werke AG and Carrefour SA, the world’s second-largest retailer, declined more than 3 percent as oil soared as much as US$8.27 a barrel this week. Anglo Irish Bank Plc led a retreat in financial shares as Citigroup Inc predicted three US investment banks will write down a combined US$6.4 billion this quarter and speculation mounted that a government bailout of Fannie Mae and Freddie Mac would leave the shares worthless.
The Dow Jones Stoxx 600 Index lost 1.2 percent to 283.82 this week, extending its slump this year to 22 percent. Financial firms have led the decline on concerns that accelerating inflation and more than US$500 billion in credit-related losses will stifle profits.
“After all the bad things we’ve had this week, the oil price is shaking the market again,” said Roger Kunz, head of investment strategy at Clariden Leu in Zurich, Switzerland, which manages the equivalent of US$120 billion in assets. “Markets are extremely nervous at the moment. That’s why they react very negatively, because the situation remains very fragile.”
National benchmark indexes declined in 15 of the 18 western European markets. Germany’s DAX slipped 1.6 percent and France’s CAC 40 fell 1.2 percent. A rally in commodity producers sent the UK’s FTSE 100 0.9 percent higher.
BMW, the world’s largest maker of luxury cars, fell 3.2 percent while Porsche SE, the maker of the 911 sports car, retreated 2.4 percent. Carrefour lost 5.6 percent and Metro AG, Germany’s largest retailer, slid 5 percent.
Crude oil rose as much as 7.3 percent this week in New York as a weakening dollar revived demand for raw materials as alternative investments. The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to a three-week high of 405.92 in New York on Thursday.
Anglo Irish, Ireland’s third-largest lender by market value, lost 15 percent while Royal Bank of Scotland Plc, the UK’s second- biggest bank, fell 5.2 percent. The Dow Jones Stoxx Banks Index dropped 4 percent this week, extending its slump this year to 32 percent.
Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc and Morgan Stanley. Separately, JPMorgan Chase & Co said Lehman may write down about US$4 billion in credit-related investments this quarter as the mortgage market deteriorates.
Billionaire Warren Buffett told CNBC that Fannie Mae and Freddie Mac “don’t have any net worth.”
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
RULES BROKEN: The MAC warned Chinese not to say anything that would be harmful to the autonomous status of Taiwan or undermine its sovereignty A Chinese couple accused of disrupting a pro-democracy event in Taipei organized by Hong Kong residents has been deported, the National Immigration Agency said in a statement yesterday afternoon. A Chinese man, surnamed Yao (姚), and his wife were escorted by immigration officials to Taiwan Taoyuan International Airport, where they boarded a flight to China before noon yesterday, the agency said. The agency said that it had annulled the couple’s entry permits, citing alleged contraventions of the Regulations Governing the Approval of Entry of People of the Mainland Area into the Taiwan Area (大陸地區人民進入台灣地區許可辦法). The couple applied to visit a family member in
CELEBRATION: The PRC turned 75 on Oct. 1, but the Republic of China is older. The PRC could never be the homeland of the people of the ROC, Lai said The People’s Republic of China (PRC) could not be the “motherland” of the people of the Republic of China (ROC), President William Lai (賴清德) said yesterday. Lai made the remarks in a speech at a Double Ten National Day gala in Taipei, which is part of National Day celebrations that are to culminate in a fireworks display in Yunlin County on Thursday night next week. Lai wished the country a happy birthday and called on attendees to enjoy the performances and activities while keeping in mind that the ROC is a sovereign and independent nation. He appealed for everyone to always love their
‘EXTREME PRESSURE’: Beijing’s goal is to ‘force Taiwan to make mistakes,’ Admiral Tang Hua said, adding that mishaps could serve as ‘excuses’ for launching a blockade China’s authoritarian expansionism threatens not only Taiwan, but the rules-based international order, the navy said yesterday, after its top commander said in an interview that the Chinese People’s Liberation Army (PLA) could blockade the nation at will. The object of Beijing’s expansionist activities is not limited to Taiwan and its use of pressure is not confined to specific political groups or people, the navy said in a statement. China utilizes a mixture of cognitive warfare and “gray zone” military activities to pressure Taiwan, the navy said, adding that PLA sea and air forces are compressing the nation’s defensive depth. The navy continues to
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