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PARIS: Calls mounted Thursday for an overhaul of the global
financial system as stocks took a new hammering, including
Philippine shares, which fell 5.3 percent.
The Tokyo stock market suffered its worst loss
for two decades, closing down more than 11 percent and European
indices shed almost 6 percent in early deals, rallying to show
losses around 3 percent later, after the Dow Jones index fell 7.8
percent.
Amid mounting recession fears, an emergency
summit of the Group of Eight wealthy powers is expected to be held
in November and President Nicolas Sarkozy of France said he would
press Europe’s calls for drastic reform of the financial system
when he meets US President George W. Bush this weekend.
EU leaders meeting in Brussels demanded greater
oversight in Europe after the financial turmoil forced them to
commit more than 1.8 trillion euros ($2.45 trillion) to banks and
the money markets.
In a draft statement likely to be endorsed at a
summit, the 27 EU leaders said they would set up a financial crisis
cell to act as an early warning system and revived plans to beef up
Europe-wide supervision of cross-border finance groups.
“Europe will present an ambitious common
vision. We do not want [the crisis] to start again,” Sarkozy told
journalists in Brussels late Wednesday.
“We are really determined to go all the way on
this overhaul,” he added.
British Prime Minister Gordon Brown, whose
rescue of British banks has earned global praise, said the world
needs a better way “of supervising our financial system. We need
an early-warning system.”
He predicted an agreement within days on holding
a G8 meeting with the emerging economic powers, such as China, India
and Brazil “to take common action . . . for very large and very
radical changes,” he said.
Brown said that by the end of the year he would
also like to see an international “college of supervisors” set
up to oversee “30 major international companies,” which he did
not name.
Swiss emergency
Switzerland was forced to take emergency
measures to prop up its key banking sector, pouring almost $60
billion into the biggest bank UBS, one of heaviest losers from the
US bad mortgage subprime crisis.
The federal state will take a temporary
9.3-percent stake in UBS. The second-biggest bank Credit Suisse,
said it did not need state help but has turned to a group of
investors for 10 billion francs ($8.79 billion) in new capital. The
biggest participant is a Qatari sovereign wealth fund.
Banking is a driving force of the Swiss economy
and UBS, which has announced staggering figures for the damage done
by its exposure to the US home-loan market.
“Confidence is the foundation for
reestablishing the stability of the international financial markets
and thus also of the Swiss financial market,” the government said
in a statement.
Eight European mutual banks struck a deal to
lend to each other to help boost confidence in the financial sector,
Credit Agricole of France announced.
The eight banks account for a fifth of
Europe’s retail banking sector.
Japanese reading
But Japanese Prime Minister Taro Aso said stocks
are falling because investors believe the $700-billion US banking
rescue plan does not go far enough.
“I think market players are selling, because
they feel the capital injections are still insufficient. Despite
some positive reaction, the market is calling for more because it
was not enough,” the outspoken conservative said in parliament.
He said a bottom to the Tokyo stock market was
not yet in sight after the Nikkei stock index plunged. Taking their
lead from Wall Street’s worst points fall, Seoul lost 9.4 percent,
Sydney 6.7 percent and Hong Kong almost 5 percent lower.
US, European markets
In morning trading in Europe, London was down
3.0 percent, Frankfurt shed 4.06 percent and Paris lost 3.25
percent.
A global recession was the markets’ biggest
fear, said CMC Markets head of trading James Foulsham in Australia,
describing the day as “another shocker.”
The Dow sank 7.87 percent on Wednesday after US
retail sales fell further than expected and Federal Reserve Chairman
Ben Bernanke said a recovery from the financial crisis would not
happen right away.
Oil prices continued to fall, with Brent North
Sea crude dropping below $68 a barrel for the first time since June
2007.
Philippine market
Philippine share prices closed 5.2 percent lower
Thursday on continued worries over a likely global recession,
dealers said.
The composite index fell 116.04 points to close
at 2,122.37 points, while the all-shares index fell 4.43 percent to
1,364.45 points.
A total of 2.02 billion shares worth P2.32
billion ($48.3 million) changed hands.
-- AFP
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