29-06-2011, 06:12 AM
June 27, 2011 8:17 AM EST
A day of confusion in trading in bank shares on the Italian stockmarket on Friday has raised concerns that the euro crisis is taking a new direction.
Media reports said investors across Europe were shaken when shares of Italian banks including giants, UniCredit and Intesa Sanpaolo, fell sharply on concerns about their capital positions.
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The Financial Times reported:
"Shares in Italian banks recorded heavy falls in trading on Friday prompting the stock market regulator to open an inquiry into stop-loss orders that may have triggered a sell off.
"Shares in UniCredit, Intesa Sanpaolo, Banco Populaire, UBI Banca and Banca Monte dei Paschi di Siena were briefing suspended after they fell 10 per cent (the limit they are permitted to fall) around 1000 GMT after starting the session in positive territory." (That's around 6 pm Friday, Sydney time.)
Intesa Sanpaolo closed down more than 4% while UniCredit lost more than 5% on the day. Investment bank, Mediobanca, the most powerful of all Italy's financial groups, lost 4%.
It has tentacles through the Italian economy in banking finance, insurance, the media, manufacturing and food.
Shares in Popolare Milano, Italy's oldest Italian cooperative bank, plunged 15% last week to the lowest since at least 1989.
Banca Monte dei Paschi di Siena was one of the biggest losers over the week (it has also been one of the weaker big banks in the past couple of years), losing 11.4% by the close on Friday.
That was the biggest fall in a year for the bank.
Market reports said the trading pause was brief, but yields on Italian government bonds surged, sparking fear that the eurozone's debt troubles could be spreading.
And, the spread between Italian and German 10-year bonds hit 212 basis points - their highest level since the creation of the euro.
The news worried markets in Europe and the US.
In London shares in Lloyds Banking Group Plc, Britain's biggest mortgage lender, fell 10% last week and those of the Royal Bank of Scotland Group dropped 12% after the head of The Bank of England, Sir Mervyn King, warned the eurozone crisis was the biggest threat to the UK financial system's stability.
And Wall Street's 1% fall was linked directly to the news from Italy.
Italy's market regulator opened an investigation into stop-loss orders executed on the shares of the banks, according to reports.
The regulator, Consob, will also monitor trading on the Milan exchange in the coming days.
Stop-loss orders are placed with brokers to sell stocks when they reach a certain price and are designed to protect profits that have already been made or prevent further losses.
Some London and US reports said over the weekend the stop loss orders and associated falls may have been linked to a warning from ratings group Moody's late Thursday, that many Italian banks faced possible ratings downgrades because of their exposure to Italian sovereign risk.
Moody's put the long-term debt and deposit ratings of 16 Italian banks and two Italian government-related financial institutions on review for possible downgrade.
It also changed the outlook to negative from stable on the long-term debt and deposit ratings of a further 13 Italian banks.
A week earlier Moody's had warned that it could downgrade Italian sovereign debt in the next three months on concerns about eurozone contagion from Greece.
Italy has government debt which will reach 120% of the size of the economy (as measured by GDP) by the end of this year.
The government has started work on a new austerity plan that could cut billions of euros of spending over the next five years.
Italian banks reportedly have more than 150 billion euros of Italian government debt.
Insurers (naturally) are also big holders as well, such as the giant Generali which held around 47 billion euro of debt at the end of last year.
The Italian government debt market is the third largest in the world, so doubts about the creditworthiness of the country are concerned matter to investors.
http://au.ibtimes.com/articles/169676/20...-worry.htm
A day of confusion in trading in bank shares on the Italian stockmarket on Friday has raised concerns that the euro crisis is taking a new direction.
Media reports said investors across Europe were shaken when shares of Italian banks including giants, UniCredit and Intesa Sanpaolo, fell sharply on concerns about their capital positions.
Related Articles
The Financial Times reported:
"Shares in Italian banks recorded heavy falls in trading on Friday prompting the stock market regulator to open an inquiry into stop-loss orders that may have triggered a sell off.
"Shares in UniCredit, Intesa Sanpaolo, Banco Populaire, UBI Banca and Banca Monte dei Paschi di Siena were briefing suspended after they fell 10 per cent (the limit they are permitted to fall) around 1000 GMT after starting the session in positive territory." (That's around 6 pm Friday, Sydney time.)
Intesa Sanpaolo closed down more than 4% while UniCredit lost more than 5% on the day. Investment bank, Mediobanca, the most powerful of all Italy's financial groups, lost 4%.
It has tentacles through the Italian economy in banking finance, insurance, the media, manufacturing and food.
Shares in Popolare Milano, Italy's oldest Italian cooperative bank, plunged 15% last week to the lowest since at least 1989.
Banca Monte dei Paschi di Siena was one of the biggest losers over the week (it has also been one of the weaker big banks in the past couple of years), losing 11.4% by the close on Friday.
That was the biggest fall in a year for the bank.
Market reports said the trading pause was brief, but yields on Italian government bonds surged, sparking fear that the eurozone's debt troubles could be spreading.
And, the spread between Italian and German 10-year bonds hit 212 basis points - their highest level since the creation of the euro.
The news worried markets in Europe and the US.
In London shares in Lloyds Banking Group Plc, Britain's biggest mortgage lender, fell 10% last week and those of the Royal Bank of Scotland Group dropped 12% after the head of The Bank of England, Sir Mervyn King, warned the eurozone crisis was the biggest threat to the UK financial system's stability.
And Wall Street's 1% fall was linked directly to the news from Italy.
Italy's market regulator opened an investigation into stop-loss orders executed on the shares of the banks, according to reports.
The regulator, Consob, will also monitor trading on the Milan exchange in the coming days.
Stop-loss orders are placed with brokers to sell stocks when they reach a certain price and are designed to protect profits that have already been made or prevent further losses.
Some London and US reports said over the weekend the stop loss orders and associated falls may have been linked to a warning from ratings group Moody's late Thursday, that many Italian banks faced possible ratings downgrades because of their exposure to Italian sovereign risk.
Moody's put the long-term debt and deposit ratings of 16 Italian banks and two Italian government-related financial institutions on review for possible downgrade.
It also changed the outlook to negative from stable on the long-term debt and deposit ratings of a further 13 Italian banks.
A week earlier Moody's had warned that it could downgrade Italian sovereign debt in the next three months on concerns about eurozone contagion from Greece.
Italy has government debt which will reach 120% of the size of the economy (as measured by GDP) by the end of this year.
The government has started work on a new austerity plan that could cut billions of euros of spending over the next five years.
Italian banks reportedly have more than 150 billion euros of Italian government debt.
Insurers (naturally) are also big holders as well, such as the giant Generali which held around 47 billion euro of debt at the end of last year.
The Italian government debt market is the third largest in the world, so doubts about the creditworthiness of the country are concerned matter to investors.
http://au.ibtimes.com/articles/169676/20...-worry.htm
"The philosophers have only interpreted the world, in various ways. The point, however, is to change it." Karl Marx
"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.
"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.