French and German eurozone woes rock markets
Germany and France, Europe’s cornerstone economies, were dragged into the eye of the debt storm on Monday, triggering a collapse of stock prices around the world.
By Louise Armitstead
The Bundesbank sharply lowered Germany’s growth forecast for next year to 0.5pc – savagely knocking confidence in Berlin’s ability to solve the rapidly intensifying crisis. Meanwhile there were fears that France would succumb to spiralling borrowing costs as Moody’s warned that the country could lose its cherished AAA rating.
A total of £36.2bn was wiped off the UK’s biggest companies on Monday as the FTSE 100 dropped 2.6pc. European markets lost more. The Stoxx Europe 600 index fell 3.2pc; the French CAC and German Dax sank 3.4pc each; Italy’s MIB dropped 4.7pc and Spain’s Ibex fell 3.5pc. US markets also fell, with the deadlock on plans to cut America’s debt driving the declines. The costs of insuring Spanish, Italy and French debt rose.