BusinessDesk: Another debt-induced slide

BusinessDesk: Another debt-induced slide

Stocks in Europe and Italian fixed-income securities were pummeled on concern about the euro zone’s debt crisis.

The benchmark Stoxx Europe 600 Index ended the day with a 4.1% drop. U.S. and Canadian financial markets were closed for the Labor Day holiday.

Financial stocks led the decline in Europe as Deutsche Bank chief Josef Ackermann said profit in the banking sector would be curtailed for years because of the sovereign debt crisis and some banks would likely fail.

"Prospects for the financial sector overall ... are rather limited," the CEO of Germany's top bank said on Monday. "The outlook for the future growth of revenues is limited by both the current situation and structurally."

Deutsche Bank, Credit Suisse Group AG, Barclays Plc, Societe Generale SA and Royal Bank of Scotland Group Plc all shed more than 6.5%, according to Bloomberg News.

"Not a great start to the week. There is a lot going on for banks, especially in the light of a low-growth environment and the backdrop in the euro zone not improving," Mike Lenhoff, chief strategist at Brewin Dolphin, told Reuters.

Investors also sold euros, buying gold and U.S. dollars instead.

The euro dropped 0.7% against the greenback after German Chancellor Angela Merkel’s Christian Democratic Union was defeated in an election in her home state, yet another indication voters are unhappy about her efforts to deal with the European debt crisis and reject plans to use more taxpayer money to help solve the problems of countries including Greece and Ireland.

“Merkel’s problem is that she fails to generate confidence in her policies and those of her coalition partner,” Gero Neugebauer, a political science professor at the Free University in Berlin, told Bloomberg. “It’s about the consistency of her statements” on bailouts for indebted euro countries.

The U.S. currency strengthened 0.66% against a basket of its major counterparts.

Investors are eyeing a German constitutional court ruling on Wednesday on claims that Berlin is breaking German law and European treaties by contributing to bailouts for Greece, Ireland and Portugal, according to Reuters.

The court is not expected to rule against the contributions, but may add stipulations for dealing with future requests that will complicate the region's bailout plans.

"People are pricing in the risk of European meltdown, rather than the likely outcome," Ian King, head of international equities at Legal & General, told Reuters.

Against this backdrop, Group of Seven financial leaders are likely to agree later this week to keep monetary policy loose. The G7’s finance ministers and central bankers meet on Friday in Marseilles, France to discuss potential to bolster the slowing global economy.

Before then however, central bankers are meeting in Australia, Canada, the U.K. and Europe and may offer investors more perspective on the global outlook.

(BusinessDesk)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

31 Comments

Comment Filter

Highlight new comments in the last hr(s).

DAX - 5.3% now

.

The United States Postal Service could shut down this winter without some emergency help from Congress.

Perhaps 1/2 million people losing job as a consequence.

http://www.ny1.com/content/top_stories/146397/us-postal-service-on-brink...

While you were sleeping the world economy fell into a black hole of permanent debt. Enjoy the view as you slide round the event horizon at the speed of light.

I think the look on merkel's face says it all really...a picture being worth a thousand words in this case.....http://curiouscapitalist.blogs.time.com/2011/09/02/are-political-suicides-needed-to-save-greater-europe/

I'm looking for best caption...I'll start it off with 

                                          "The Look Not to have when your getting Screwed"

 

Friday already is it.... love a good caption competition... just can't think of one.

'Merkel dumps... ' couldn't finish it.

The Blair/Murdoch godfather story has really irked me... Wrong in so many ways.

How can one ever construct an historical view when this sort of stuff goes on... I give up. 

Needs work...KWJ....not really a dump face is it....kind of an impending doom face....or ...that gadget just went off in her handbag look.

As to Blair /Murdoch always  refreshing to know you find the lowest of life in the highest of places.....they don't get lost that way.

Blair will go on to enjoy speaking engagements where people pay squillions to...  hopefully get a little drivel / spittle on them..... and hope it takes. ...not to mention the photo op's with adjusted timelines.

A gong to that photographer, the picture is pure gold!

What a wonderful pic!

cheers

Bernard

Yes Bernard...you will of course have to save it for the inevitable editorial on her demise as  a leader in EU recovery.

there's another good caption....Dead..? What do you mean it's dead..? 

.... is there a Mr Merkel ..... someone who wakes up in the morning next to that mug ?

I'd be an early riser , 3 a.m. should be dark enough !

Come on GBH..your at the top of my list to win the caption comp.........although I've noticed Walter's starting to string his sentences together  lately.......

At first glance , I thought her pic was one of Bernard's " Muppets " video clips ...... but even " Animal " ain't that scarey !

all true GBH ........but the Caption my man the Caption......or are you waiting for Bernard to go first...?   He's in a jolly spring mood ....so  quite likely to be feeling a little playful.....

.....  " and now , TV 3  takes you live to Sao Paulo , Brazil ..... for the 2011 Miss Universe contest .... . today's programme starts   at the Villa Maria School of Samba , and we have our first contestent to lead us off .... take it away  Miss Germany , Angela Merkel ...... cha cha cha ! ..... "

Thanks Christov - yeah I reckon I make a lot more sense then Indonesien backpacker tourist GBH. He's losing it with some good looking girls.

Alright Walter...I been away for some time...whats the story on GBH...being the fallen hero....come on now man out with it ...what did he do....uh...?"

Did he say something to one of the beautiful people at int.co....tell me where, n  I'll go have a lookie see. 

Uhhhhhhhshit Christov, I see David just entered the conversation - more 0 pressure - have to go sorry ! Give him another tick - on top of his.

He's bathroom is "propbabely" deocrated with images of dangers immigrants bringing their shity agendas from foreign homes with them.

 

ta Walter ...but I still wanna know what happened....must have been a doozey..!

later matey.

Too right kunst. You can flush those shitty agendas down your own country's sewers where they belong.

- pause - I told you Christov - uufff - "SKY ad" right - left - right - left - he's a little nasty H.

David, do you truly hate immigrants that much? Surely it is a good thing that immigrants are interested and integrated enough to contribute to the debates on websites like this one.

I am convinced that most people who live in NZ do want the best possible future for the country and that includes immigrants (at least those who came to NZ to stay, not to use it as a bridge to Oz).

Looks like a photoshop job....

but the article is great....sums up my thoughts......frying pan or the fire....

regards

Allrighty.........come on you scamps...!...

Please see post of 9.34 am to witness Angela Merkel's response to being nominated for....

......................Woman for a Crisis Award....by the European Union....

 

 Hmm - looking at her a little bit longer - I think there is no toilet paper either - just pressing along and no results.

 I wouldn’t have a party banner in my bathroom.

 

 

Angela Merkel has just learned what the...x²...meant at the end of the zero's on the Greek debt figure.

To me it looks like her study of PDK's Petant curve has just gone horribly wrong. What are your thoughts Elley?

Nice DavidB......but a little more headline stuff ........ s'il vous plait...maybe something like

Angela gains confidence vote from Peak Oil Community 

Come on, are you seriously expecting me to have any thoughts (coherent ones I mean) when I am up half the nights (the "While you were sleeping" heading does make me smile)... 

This picture is priceless though. My little miss can make some seriously weird alien-like faces but she's no match for Ms Merkel! The photographer should be up for an award I reckon. I wonder if he's got a similar one of Sarkozy to share :)

 They all look the same lately - shall we call them “Bathroom politicians constantly under pressure, but without a concrete delivery - then a piece of s...” ?

Here you go Elley ....number 6 and number 1 I believe are the nearest to Angela's condition.

http://www.bogotop.com/top/392/top-10-funny-pictures-of-french-president-sarkozy

Thanks, #1 is really good! Hopefully he doesn't pull this face at home too often or he might scare Carla away...

Sarkozy and Merkel could partner each other in Gummy's dance competition. Dancing with the Pollies. I'm sure thay can both do a mean side step.