After a black Monday European markets have experienced a dark grey Tuesday. The Lehman effect and the troubles at AIG, the world’s biggest insurer, continued to prevail. National benchmark indices fell in all 18 western European markets, except Spain and Portugal where there is limited exposure to subprime lending.
The UK’s FTSE 100 closed over three percent down as did Brussels. Also falling but in a welcome way was the price of crude which tumbled, dipping below 90 dollars a barrel, as concern grew that a weakened economy would reduce demand.
But gloom was rife in Moscow. Russian shares posted their worst one-day fall in a decade as major banks slumped between 20 and 30 percent and money market liquidity all but dried up.
The sell-off was sharp enough to prompt a temporary trading suspension with calls for calm from the country’s finance minister falling on deaf ears.