down 599 right now.
Global Stocks Retreat, Led by Banks, as Credit Crisis Widens
By Adria Cimino and Chua Kong Ho
Oct. 6 (Bloomberg) -- Stocks tumbled around the world, the euro fell the most against the yen since its debut and oil dropped below $90 a barrel as the yearlong credit market seizure caused bank bailouts to spread. Government bonds rallied.
The Standard & Poor's 500 Index retreated 5.9 percent, extending the worst weekly slump since 2001, as concern slower global growth will curb demand for commodities sent Alcoa Inc. and U.S. Steel Corp. down more than 7 percent. The MSCI Emerging Markets Index headed for its biggest loss in at least two decades and exchanges in Russia and Brazil halted trading. Europe's Dow Jones Stoxx 600 Index had its steepest decline since 1987.
Today's plunge erased about $2.5 trillion from global equities after the German government was forced to bail out Hypo Real Estate Holding AG, overshadowing the $700 billion U.S. Treasury plan to revive credit markets. The euro weakened 6 percent against the yen, the most since 1999.
``It's like a fire,'' said Emmanuel Soupre, a fund manager at Neuflize OBC Asset Management in Paris, which oversees the equivalent of $33 billion. ``It's easier to extinguish five minutes after the start. Now we're about an hour into it. We have to act quickly to assure the continuity of the financial system to avoid an irreversible contamination of the entire economy.''
Two-year Treasury yields plunged 0.19 percentage point to 1.39 percent as investors sought the relative safety of government bonds. The MSCI World Index slid 6.9 percent as every industry fell at least 5 percent. Rio Tinto Plc, the world's second-biggest aluminum producer, fell 15 percent and UBS AG, the largest Swiss bank, lost 13 percent.
The Dow Jones Industrial Average dropped 545 points, falling below 10,000 for the first time since October 2004. Europe's Stoxx 600 sank 7.6 percent, the biggest decline since the October 1987 stock market crash.
National benchmark indexes fell in all 18 western European markets. London's FTSE 100 dropped 7.9 percent, the most in 20 years. Russia's Micex plunged 19 percent, led by OAO Gazprom's 21 percent decrease. The MSCI Asia Pacific Index lost 4 percent, as Mitsubishi UFJ Financial Group Inc. and Macquarie Group Ltd. retreated more than 9 percent.
An 11 percent tumble in Brazil's Bovespa Index and 10 percent drop in Indonesia's Jakarta Composite Index pushed the MSCI Emerging Market Index down 10 percent, the steepest in two decades.
``We're seeing panic all over the markets right now,'' said Javier Barrio, head of equity sales for Spanish clients at Banco BPI SA in Madrid. ``Governments are taking steps to try to reduce investors' fears but confidence is weak.''
The plunge in stock markets accelerated along with bailouts of financial institutions and subprime-related credit losses that have approached $600 billion. The MSCI World is valued at 13.2 times the earnings of its companies, the lowest since at least 1995, according to data compiled by Bloomberg. Europe's Stoxx 600 trades at 10.4 times earnings, near the lowest level since at least 2002, while the S&P 500 is valued at 20.9 times earnings.
UBS, the European bank worst hit by credit crisis, lost 3.08 to 20.90 francs. The bank's earnings will be ``challenged for some time,'' and UBS may write down $3.1 billion in the third quarter, Oppenheimer & Co. analyst Meredith Whitney wrote in a note to clients. The Swiss bank has posted $44 billion in losses, according to data compiled by Bloomberg.
Overnight Commercial Paper Rates Rise as Bank Bailouts Spread
By Bryan Keogh and John Detrixhe
Oct. 6 (Bloomberg) -- Corporate short-term borrowing rates soared as bank bailouts spread through Europe and the Federal