The White House and Congress may have reached a tentative agreement on the shape of the US$700 billion Wall St bailout but the bad news kept coming yesterday - this time from Europe.
European shares fell heavily in early trading last night after more big banking bailouts rocked
investor confidence. The British Government said that lender Bradford & Bingley's branch network woul be sold to Spanish bank Santander and the remainder of the group would be nationalised. Belgian-Dutch bank Fortis also underwent nationalisation after emergency talks with European Central Bank President Jean-Claude Trichet. Fortis is the first major European bank to buckle since US mortgage defaults triggered global financial turmoil in August last year.
"The nationalisations have an incredibly negative read-across for the sector," said Mark Sartori, head of European sales trading at Fox-Pitt.
"The contagion is spreading to mainland Europe and everyone's asking: who's next?" he added.
The New Zealand market, the first to open for business this week, faltered after a positive start to close virtually flat yesterday.
The NZX-50's early gains were reversed as the session wore on and it closed just one point or 0.03 per cent higher at 3188.54.
With top stocks such as Fletcher Building and Contact down 0.8 per cent and 1.43 per cent respectively, ABN Amro Craigs retail adviser Bryon Burke said only Telecom, up 5c, and Steel & Tube, up 80c, stopped the index sinking into negative territory.
The early gains were undermined when the Australian market, after a positive start, also gave up its early gains to close down almost 2 per cent.
"All eyes are still on the world for direction and investors in New Zealand in general continue to stand on the sidelines. The market's not a fun place to be at the moment."
