Banks biggest losers as European stocks plunge

Eurostoxx 50: 2,206.61 (–124.51) Frankfurt DAX: 5,602.81 (–346.14) Paris CAC: 3,076.04 (–178.14)

EUROPEAN EQUITIES plummeted the most in more than two years yesterday, as US economic data missed forecasts, two Federal Reserve officials said the central bank should not act to protect stock investors.

Swedish regulators have warned that lenders are unprepared for a freeze in money markets.

The Stoxx Europe 600 Index plunged 4.8 per cent in London.

“If investors were looking for proof that we could be heading for recession, you have it here,” Henrik Drusebjerg, a senior strategist at Nordea Bank in Copenhagen said.

Dexia, Belgium’s biggest lender, tumbled 14 per cent to €1.57.

Société Générale, France’s second-largest lender, dropped 12 per cent to €21.60, the lowest since March 2009.

HSBC, Europe’s biggest bank by market value, declined 6 per cent to 509.6p.

Swedbank retreated 9 per cent to 83.55 kronor in Stockholm, the largest decline in two years.

Nordea Bank, Sweden’s biggest bank, fell 7.4 per cent to 54.70 kronor.

Swedish banks must do more to prepare for a deterioration in Europe’s debt crisis that could freeze interbank markets and cut off funding, said Lars Frisell, chief economist at the country’s financial regulator.

“It won’t take much for the interbank market to collapse,” Mr Frisell said in Stockholm. “It’s not that serious at the moment but it feels like it could very easily become that way and that everything will freeze.”

Fiat fell 12 per cent to €4.33, pushing European carmakers lower as the gauge fell the most of the 19 industry groups in the Stoxx 600. Continental, Europe’s second-largest car-parts supplier, retreated 8.6 per cent to €49.37.

Holcim sank 8 per cent to 44.03 Swiss francs after reporting second-quarter net income of 347 million francs, missing the 373.3 million-franc average estimate of analysts in a Bloomberg survey.

FLSmidth, the world’s biggest maker of cement kilns, fell 14 per cent to 277.60 kroner as its earnings missed analysts’ forecasts.

SABMiller retreated 6 per cent to 2,010p after the board of Australian brewer Foster’s rejected its hostile A$9.5 billion takeover bid. – (Bloomberg)