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| Global stocks fall on credit fear | |
| (about 2 hours later) | |
| Global stocks have slumped amid fears over the fallout of the credit crisis, after Goldman Sachs downgraded Citibank and forecast $15bn (£7.3bn) in losses. | |
| The Dow Jones industrial average fell 217.86 points, or 1.65%, to end at 12,958.93 - its lowest level in three months. The Nasdaq shed 1.33%. | The Dow Jones industrial average fell 217.86 points, or 1.65%, to end at 12,958.93 - its lowest level in three months. The Nasdaq shed 1.33%. |
| London's FTSE lost 170.4 points at 6,120.8 - its biggest drop since the credit crisis peaked in August. | London's FTSE lost 170.4 points at 6,120.8 - its biggest drop since the credit crisis peaked in August. |
| European stocks also fell more than 1% in both France and Germany. | European stocks also fell more than 1% in both France and Germany. |
| The benchmark Frankfurt Dax shed 1.3% and the Paris Cac ended 1.7% lower. | The benchmark Frankfurt Dax shed 1.3% and the Paris Cac ended 1.7% lower. |
| "It is once again the financial sector that has led to the latest bout of nervousness," said Phillip Vorndran, strategist at Credit Suisse Asset Management. | "It is once again the financial sector that has led to the latest bout of nervousness," said Phillip Vorndran, strategist at Credit Suisse Asset Management. |
| 'Aftershock' | 'Aftershock' |
| Goldman Sachs recommended that investors in Citigroup sell their shares, prompting concerns that the impact from the credit crisis could be more dramatic than originally thought. | Goldman Sachs recommended that investors in Citigroup sell their shares, prompting concerns that the impact from the credit crisis could be more dramatic than originally thought. |
| The negative outlook for banking giant Citigroup comes after the bank said it expected to see between $8bn and $11bn in writedowns in the fourth quarter. | |
| "It's dreadful. There's been aftershock after aftershock from the credit crisis," said Brian Gendreau, strategist at ING Investment. | "It's dreadful. There's been aftershock after aftershock from the credit crisis," said Brian Gendreau, strategist at ING Investment. |
| "A major bank downgrading another major financial institution to 'sell' - that's unusual," he added. | "A major bank downgrading another major financial institution to 'sell' - that's unusual," he added. |
| Citigroup dropped 5.9% by close of trade. Other finance firms to fall included Bank of America, down 3.5% | Citigroup dropped 5.9% by close of trade. Other finance firms to fall included Bank of America, down 3.5% |
| Worries about more losses to come were also stoked after reinsurance firm Swiss Re announced $1.07bn Swiss francs in writedowns. | |
| Meanwhile in the UK, Northern Rock was the biggest faller, down 21.4% after the institution described bids for the firm as being "materially below" its share price. | Meanwhile in the UK, Northern Rock was the biggest faller, down 21.4% after the institution described bids for the firm as being "materially below" its share price. |
| Other finance firms to fall included Royal Bank of Scotland, down 5.3%, while Alliance & Leicester dropped 4.2%. | Other finance firms to fall included Royal Bank of Scotland, down 5.3%, while Alliance & Leicester dropped 4.2%. |
| Wider impact | |
| But it was not just finance firms that were hard hit on Monday. | |
| Auto firms and airlines also saw their stocks decline, as fears over the slowing US housing sector fed into wider concerns about the state of the US economy. | |
| GM saw its stock at its lowest for nearly 18 months, at $26.57, and fell 8.5%v overall to end at $26.79. | |
| Delta Airlines dropped 4.8% and Continental Airlines shed 6%. |