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Bank worries haunt global markets Bank worries haunt global markets
(about 3 hours later)
World stock markets are braced for heavy falls after confidence in the US banking sector was dented further by the resignation of Citigroup's boss. Stock markets have fallen across Asia and Europe as confidence in the US banking sector was dented further by the resignation of Citigroup's boss.
Markets fell sharply in Asia in reaction to Charles Prince's exit, the second departure of a leading Wall Street bank boss within days.Markets fell sharply in Asia in reaction to Charles Prince's exit, the second departure of a leading Wall Street bank boss within days.
The Hang Seng index fell 5%, or 1,526 points, in Hong Kong while the Nikkei slid 248.56 points, or 1.5%, in Tokyo.The Hang Seng index fell 5%, or 1,526 points, in Hong Kong while the Nikkei slid 248.56 points, or 1.5%, in Tokyo.
Shares also fell in London, Paris and Frankfurt in early trading. Shares also fell in London, Paris and Frankfurt although losses were limited.
The FTSE 100 benchmark index was down 37 points at 6,493.2 in London while the Dax index fell 56.05 points to 7,793.44 in Frankfurt.
In Paris, the key Cac index slipped 39.96 points to 5,680.46.
Worries over banks' exposure to US sub-prime related debts has been causing market instability for several months.
Credit squeezeCredit squeeze
It is feared that the current credit squeeze - triggered by banks' unwillingness to lend while they assess the size of potential sub-prime mortgage related losses - will hit growth in the global economy. The FTSE 100 benchmark index was down 94.3 points at 6,436.3 in late morning trade in London with Northern Rock, Barclays, Royal Bank of Scotland and Alliance & Leicester among finance stocks to suffer.
Citigroup disclosed that its losses stemming from bad sub-prime related investments could total between $8bn and $11bn. Meanwhile, the Dax index was down 50.62 points at 7,798.87 in Frankfurt while, in Paris, the benchmark Cac index slipped 56.74 points to 5,663.68.
Mr Prince's departure followed the departure of Merrill Lynch boss Stan O'Neal last week. Worries over banks' exposure to US sub-prime related debts has been causing market instability for several months.
The market is very concerned about what is going on in the banking sector William Claxton-Smith, Insight InvestmentThe market is very concerned about what is going on in the banking sector William Claxton-Smith, Insight Investment
European markets are expected to be under intense pressure in early trading as traders digest the scale of the crisis in the US banking sector. It is feared that the current credit squeeze - triggered by banks' unwillingness to lend while they assess the size of potential sub-prime mortgage related losses - will hit growth in the global economy.
The FTSE 100 index in London lost ground on Friday as concerns about leading British banks and their sub-prime exposure sent the market down. Citigroup disclosed that its losses stemming from bad sub-prime related investments could amount to between $8bn and $11bn (£3.8bn and £5.2bn).
Mr Prince's departure followed the departure of Merrill Lynch boss Stan O'Neal last week after the firm suffered its first quarterly loss in five years.
'Nerves'
Traders digesting the scale of the crisis in the US banking sector are worried about the exposure of European banks to worthless sub-prime related assets.
"We will have a nervous day again today," William Claxton-Smith, from Insight Investment, said about the FTSE's prospects."We will have a nervous day again today," William Claxton-Smith, from Insight Investment, said about the FTSE's prospects.
"The market is very concerned about what is going on in the banking sector. The big problem is the uncertainty that nobody really seems confident that anyone has got a handle on what is happening.""The market is very concerned about what is going on in the banking sector. The big problem is the uncertainty that nobody really seems confident that anyone has got a handle on what is happening."
All eyes will also be on the US markets when they open on Monday amid fears that other US banks are sitting on huge losses and the credit crisis may still get worse.All eyes will also be on the US markets when they open on Monday amid fears that other US banks are sitting on huge losses and the credit crisis may still get worse.
The benchmark Dow Jones index made gains on Friday after positive employment data but trading has been highly volatile in the last few months as the lending crisis has worsened.The benchmark Dow Jones index made gains on Friday after positive employment data but trading has been highly volatile in the last few months as the lending crisis has worsened.