Renewed fears over credit troubles and the health of banks sent shares nose-diving on both sides of the Atlantic on Friday in the steepest losses since the August peak of present market upheavals.
Credit market sentiment worsened after brokerages downgraded Citigroup and Bank of America on Thursday, a day after the Federal Reserve cut U.S. interest rates to limit economic damage from the housing market's downturn.
On Wall Street the Dow Jones industrial average fell 362.10 points to end the day at 13,567.90.
Earlier in London the FTSE 100 index lost two percent, or 135.5 points, to close at 6,581.1, with banking stocks contributing 40 points to its decline.
Renewed Concerns
Concerns about the fallout from U.S. subprime mortgages sparked a sell-off in risky assets and pushed up the cost of interbank lending in August and September, prompting the world's major central banks to inject liquidity to prevent the financial system from seizing up.
Economists said that a clear signal from the Fed that its quarter-point rate cut on Wednesday may be the last for some months added to investor’s fears that the central bank’s capacity to fend off a severe US slowdown may be hampered by its worries over inflation dangers.
Additional downward pressure came from Credit Suisse (CS), which reported a 31 percent decrease in third-quarter income due to the write-down of mortgage related holdings.
November 2 2007
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