Black Monday for Spanish bourse as record dip bites
Panic selling hits Europe as US recession fears take hold.22 January 2008
MADRID - Spain, along with stock markets across the globe, suffered one of its worst days ever as panic gripped investors in what amounted to a monumental lack of faith in President George W. Bush's proposed stimulus package to prevent the US economy sliding into recession.
The Spanish blue-chip Ibex 35 shed 7.54 percent as the local market experienced its second-biggest fall ever after 1991 with the ouster of Soviet President Mikhail Gorbachev. The benchmark index has also had its worst start to the year ever, shedding 16.8 percent since the first trading session in January.
The scenario was similar in the rest of Europe. London shed 5.48 percent, Frankfurt 7.16 percent and Paris 6.83 percent.
Banks, which have already being suffering from credit crunch fears, suffered the brunt. Santander, Spain's biggest lender, lost 9.0 percent. It is directly exposed to the United States through its Philadelphia-based Sovereign Bank affiliate but has vastly more exposure to Latin America, which is highly reliant on the US economy.
The initial boost on Friday of last week provided by Bush's plan to provide USD140 billion in tax breaks evaporated in no time, with Wall Street closing lower as investors took the view that the package would be too little, too late to avoid a recession. Tokyo took its cue from this on Monday, dropping 3.86 percent. That set the scene for the carnage in the European bourses. New York was closed yesterday for the Martin Luther King public holiday.
[Copyright EL PAÍS / A. SIM 2008]
Subject: Spanish news