Europe’s investors have again been hitting the sell button as nerves remain very frayed after a steep sell-off triggered by concerns about the US slipping back into recession and the debt crisis in the euro zone.
French bank shares fell sharply for a second day running despite reasurances from the French central bank chief that they are solid. The concerns centre on how much money they have lent to countries like Greece and whether they will get it back.
“There’s no way you can dispel the fact that the rumour might be true, might not be true, you just have to react to it on the floor. Well if you’re greeted with that rumour and you see the next 20 orders in the bond pit are ‘buys’ or the next 20 orders in a stock pit are ‘sells’ you’re forced to go along with the order flow because it just might be true,” said Dan Haugh, President of PTI Securities.
His words were highlighted by Societe Generale. Trading in the French bank’s shares was briefly suspended on opening amid rumours of bankruptcy. In 15 minutes, nearly two million shares were traded.
The company was forced to “categorically” deny it was under financial pressure. Trading has since resumed and the price of its shares have risen.