Another drop on the share market

Debt crisis: share prices slump in response to France deficit

Rumours that France could be stripped of AAA credit rating prompts drop of around 400 points on Wall Street

Guardian

Share prices in Europe and North America were back on the slide after France became the latest country to be sucked into the deepening debt crisis.

Amid rumours that France would follow the US in being stripped of its AAA credit rating Nicolas Sarkozy, the French president, said plans to reduce his country's budget deficit would be announced within the week.

Fears that French banks were in difficulties meant that the rally in shares prompted by the US Federal Reserve on Tuesday proved to be shortlived, with markets resuming the pattern of heavy selling seen since late July. Britain's FTSE 100 index suffered its fourth fall of more than 100 points in five days, dropping 158 points to close the day 3% lower at 5007 points.

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STOCKS DEMOLISHED AGAIN, DOW OFF OVER 500, BANK STOCKS CRUSHED: Here's What You Need To Know

Business Insider

Aug. 10, 2011, 4:00 PM |

• The Europe crisis entered a dangerous new phase today, as the sickness breaks through the periphery and enters the core, with major concerns about French banks. SocGen -- whose CEO just appeared on CNBC to dispel all rumors about any business issues -- got crushed today. Early on there were rumors of France losing its AAA ratings -- though the raters came out and re-affirmed it - and there was a strange typo story that freaked people out.

• Major European bourses got routed across the board, with Italy falling by the most: 6.65%.

• Things were fairly quiet on the US futures front until around 8:30, and that's when things started falling out of bed. Meanwhile, banks in the US had another horrible day, with Bank of America leading the way. BofA CEO Brian Moynihan had a public conference call with shareholder Bruce Berkowitz, and during the call the stock actually rallied a bit, but after the call the beating resumed. Citigroup also had a horrible day, losing around 10%.

• Around the time of the BofA call, markets overall tried to make a comeback, and at one point the Dow was off less than 150, but that was fleeting, as the carnage quickly resumed. Earlier, also, there was a mini-comeback after a CNBC interview with Jamie DImon, where he basically said everything was fine. That didn't last long. Generally speaking, this parade of bank CEOs making public statements in their defense have not been helpful. Other banks, like Goldman and Morgan Stanley had big losses as well.

• Not surprisingly, gold had a fantastic day, at one point breaking above $1800 (it lost a little bit after that).

• And meanwhile, world leaders are on vacation, with seemingly little going on behind the scenes. Bottom line: Yesterday's huge post-FOMC rally had no carry-through at all.