Markets fall 5% across Europe

Oct 6 2008 By Alex Turner

EUROPEAN markets fell sharply this morning as confusion remains about what action governments can take as the credit crunch continues to claim victims.
The FTSE-100 was down more than 300 points, before recovering by 30 points to be at 4,710 at 11.30am, a fall of 5.4%. Germany’s Dax was down 5.6% and France’s CAC had fallen 5.8%.
Banking stocks were again badly hit. In the UK Halifax Bank of Scotland lost gains seen at the end of last week, while Royal Bank of Scotland was also more than 10% lower.
The Irish banks, which were strengthened when the Irish Government guaranteed all deposits in the country’s six major banks last week, were also big fallers.
Anglo Irish Bank fell 25% and Allied Irish Banks and Bank of Ireland were both down 19%.
The falls followed a state bail out for German institution Hypo Real Estate and worries over rapidly-spreading contagion from the credit crunch.
There was also confusion about the promise by Germany’s Chancellor Angela Merkel that the government would guarantee all savings as it transpires this was to be a political, not legal, guarantee.
Chancellor Alistair Darling is to address the House of Commons this afternoon on the continuing crisis, with weekend reports suggesting he is considering a recapitalisation of UK banks, funded by the taxpayer. The move is expected to receive cross-party support.
On Thursday the Bank of England is widely expected to cut interest rates from 5%, by one-quarter of a percentage point.