Today's Coming Crisis Movie

Wednesday, August 10, 2011

France facing debt downgrade? European Shares Close Down 3.5% on French Bank Fears

European shares ended sharply down on Wednesday, led lower by a steep sell-off in banking shares, with Societe Generale down more than 21 percent at one point on a slew of rumours about the bank.

A SocGen [SOGN.PA 22.18 -3.835 (-14.74%) ] spokeswoman categorically denied all rumours relating to the bank's financial solidity, but the bank's shares were still down 14.7 percent after hitting a 2-1/2-year low and witnessing their biggest daily percentage decline in more than two decades.

Credit Agricole [CAGR.PA 6.073 -0.813 (-11.81%) ] fell 11.8 percent, while the European banking index [.SX7P 138.08 -9.95 (-6.72%) ] was down 6.5 percent.

"We are running short of triple-A countries. If France is downgraded, that raises issues about other countries as well. Fundamentally public finances are not very strong," said Klaus Wiener, chief economist at Generali Investments, which manages 330 billion euros ($469 billion).

"It's very unfortunate to see all this action at this point in time when we have a very fragile market environment." (more)