GERMANY: DAX index starts trading down almost four per cent after the U.S. Federal Reserve gave a gloomy outlook for the economy

Record ID: 858125

  • Title: GERMANY: DAX index starts trading down almost four per cent after the U.S. Federal Reserve gave a gloomy outlook for the economy
  • Date: 23rd September 2011
  • Summary: FRANKFURT, GERMANY (SEPTEMBER 22, 2011) (REUTERS) EXTERIOR OF STOCK EXCHANGE EU FLAG VARIOUS OF TRADING FLOOR VARIOUS OF TRADERS (SOUNDBITE) (German) ROBERT HALVER FROM BAADER BANK AG, SAYING: "That's two big disappointments today. First of all the FED did not do the right thing. The markets had expected even more to stimulate the U.S economy and secondly the downgrades of the U.S. and Italian banks is very bad for the markets, for the mood." BOARD SHOWING DAX GRAPH (SOUNDBITE) (German) ROBERT HALVER FROM BAADER BANK AG, SAYING: "We have a political crisis, a financial crisis, a banking crisis and because of the lack of ability of European politicians to solve the problems, the beat will go on. We will see more and more downgrades of banks." BOARD SHOWING LOWEST AND HIGHEST VALUES OF THE DAY VARIOUS OF TRADERS BOARD SHOWING DAX GRAPH WIDE OF TRADING FLOOR
  • Embargoed: 8th October 2011 13:00
  • Keywords:
  • Location: Germany, Germany
  • City:
  • Country: Germany
  • Topics: Business,Finance
  • Reuters ID: LVAC14LJ8C7EOATB1XTBL6KC7K1Z
  • Aspect Ratio:
  • Story Text: German shares opened sharply lower on Thursday (September 22), continuing the previous session slides and tracking falls on Wall Street and in Asia after the U.S. Federal Reserve gave a gloomy outlook of the economy.
    At 0805GMT Germany's DAX was down 3.79 per cent at 5227 points.
    Wall Street fell after the U.S. Federal Reserve said "there are significant downside risks to the economic outlook" when announcing it would buy longer-term securities in a plan known as "Operation Twist" to help boost growth and lower long-term borrowing costs.
    U.S. banks also suffered after Moody's Investors Service cut the credit ratings of Bank of America, Citigroup and Wells Fargo, and said the government was less likely to support a large bank if it became financially troubled.
    Seven Italian banks were also downgraded by rating's agency Standard and Poor's.
    "That's two big disappointments today. First of all the FED did not do the right thing. The markets had expected even more to stimulate the U.S economy and secondly the downgrades of the U.S. and Italian banks is very bad for the markets, for the mood," Robert Halver from Baader Bank told Reuters TV.
    Investors will next focus on euro zone purchasing managers index (PMI) data for signs of growth in the manufacturing and service sector in Europe.
    Concerns about slowing growth as well as lack of coordinated action by policymakers to solve the euro zone sovereign debt crisis and fears Greece could default has seen the DAX fall to the lowest level in two years recently.
    "We have a political crisis, a financial crisis, a banking crisis and because of the lack of ability of European politicians to solve the problems, the beat will go on. We will see more and more downgrades of banks," Halver said.
    Investors will also watch the Group of 20 meeting starting Thursday and Friday in Washington and it was expected Europe will face pressure to be more decisive in tackling the crisis.
    The challenge for the G20 talks is to prevent a sovereign debt crisis centered in Greece from turning into a full-blown banking crisis.
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