Swiss banks UBS, Credit Suisse announce capital plans
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- Recession fears hammered European shares for a second day on Thursday, with miners slumping again, while the Swiss government's move to shore up UBS served to remind investors that troubles in the banking sector haven't gone away.
The pan-European Stoxx 600 index dropped 3.0% to 210.62, meaning that the index is trading roughly 9% below Tuesday's 232.22 close.
Miners were veering towards a crash, with a 7% decline in Rio Tinto shares bringing losses for the firm to around 22% in two sessions.
Elsewhere in the sector, Anglo American fell 6.9% and Xstrata as down 5.6.%.
Rio Tinto's comments early Wednesday that Chinese growth was slowing and that it was reconsidering its capital expenditure and asset-sale plans sent shockwaves through a sector that is highly sensitive to perceptions of economic growth.
Central bankers and governments around the world have been trying to shore up the banking sector in order to limit the spill over to global economic growth.
Those efforts continued on Thursday after the Swiss authorities said that they would set up a fund to take up to $60 billion of assets off UBS's balance sheet. See full story.
Shares in the Swiss bank fell 8.8%. It's going to raise up to 6 billion Swiss francs of capital.
Peer Credit Suisse ell 8.5% after it said it's also going to raise capital, but from investors. The bank expects to report a loss in the third quarter.
On a national level, the U.K. FTSE 100 index 3.7% to 3,930.11, the German DAX 30 index dropped 4.6% to 4,637.57 and the French CAC-40 index dropped 4.6% to 3,225.79.
A steep sell-off battered blue-chip U.S. stocks Wednesday, with the Dow Jones Industrial Average dropping more than 700 points on fresh evidence that a painful recession is underway. See U.S. Market Snapshot.
Japanese stocks got thrashed Thursday, with the Nikkei 225 Average ending more than 11% lower, on similar worries. See Asia Markets.
Back in Europe and shares in Swedish industrial firm SKF fell 4.6% after it said that it expects demand to decrease slightly in the fourth quarter.
"We delivered a very strong third-quarter result. However, towards the end of the quarter, with the dramatic events in the financial markets, we had lower volumes particularly in our automotive business, while volumes in our industrial business were strong," the firm said.
Third-quarter net profit rose to 1.26 billion Swedish kroner, from 1.17 billion kroner a year ago. Sales climbed to 15.38 billion kroner, from 14.16 billion kroner at the same point last year.
Shares in Thomson SA dropped 11.2%. The maker of set-top boxes said that third-quarter revenue dropped a below-forecast 15% to 1.17 billion euros.
