European shares dropped this evening, led lower by financial stocks, after ECB forecasts showed that the euro zone economy could shrink by more than 3% this year, re-igniting fears over the global recession. The falls came despite cuts in euro zone and UK interest rates.
In London, the FTSE lost 116 points (3.2%) to end at 3,530, with insurer Aviva losing 33% to 190p after its losses sparked concerns about its financial strength and Barclays ending down 24% at 65.5p. In Frankfurt the DAX shed 5% to close at 3,695 and in Paris the CAC fell almost 4% to 2,570.
In Dublin, the ISEQ ended down 29 points (1.4%) at 2,019, with bank shares also falling further in line with other markets. AIB dropped seven cent to 27 cent and Bank of Ireland fell six to 13 cent. Insurer FBD dropped another 70 cent to €6 after reporting a 2008 loss yesterday.
On Wall Street, shares also tumbled on fears about car maker GM's future, as well as more weak economic figures. The Dow Jones was down 213 points at 6,663 and the Nasdaq fell 41 to 1,313. Earlier this morning, Tokyo's Nikkei 225 index closed 143 points (1.9%) higher at 7,433 as investor sentiment brightened on hopes for a Chinese recovery.
