UK: LONDON: STOCK MARKETS TUMBLE IN MIDDAY TRADING

Описание: (13 Jan 1999) English/Nat

Jittery about Brazil's financial crisis, European stock markets went into reverse on Wednesday.

Stock markets in London, Paris and Frankfurt took a tumble in midday trading with bank stocks leading the decline, mainly because of exposure to Brazilian debt.

And though Brazil has acted to calm the markets, some analysts still fear an Asian-style financial meltdown.

Worry over Brazil soured the recent rally in European stock markets on Wednesday.

London, after reaching a record high last week, dropped 4.6 percent by late afternoon trading, Frankfurt and Paris dropped more than four percent.

The trouble started last week after Brazil's third biggest state announced a 90-day moratorium on federal government debt payments.

On Wednesday, the nation's central bank governor Gustavo Franco resigned, heightening the uncertainty.

SOUNDBITE: (English)
"Basically there are some worries about Brazil, they devalued this morning, and we've also seen the resignation of their finance minister. That's put the skids on the market, but it also came at a time when we had worries about the Japanese yen and after a very strong ride of the market in the first few weeks of the year we were due for a bit of profit-taking and there has been a bit more than that."
(Q- How significant is four point six percent? We see markets going up and down all the time?)
A - "Four point six percent in itself is not a big fall, an awfully huge fall. It's a big one day fall but it depends where the markets have been and where they might go the rest of the year. I don't think we should get too alarmed about this on a one-day basis. It has wiped out the gains that we have seen so far this year both in London and really right across Europe so to that extent it is quite a big fall."
SUPER CAPTION: Tim Huddart, Director of Global Securities Research

Some analysts felt the panic selling mirrored last year's Asian crisis.

And despite actions by the Brazilian government, there are still fears the worst is still to come.

SOUNDBITE: (English)
"It is really the knock on effect we've seen with Asia 18 months ago, that it took some six to nine months before the negative impact really hit home here in the UK and Europe. We think people are concerned that the same thing might start to happen here as a result of what's going on in Latin America today.
(Q- Is it possible to have an Asian style financial crisis in Latin America? Is that what we're looking at?)
A - "I think it is possible. I wouldn't want to go so far as to say that is what is going to happen because I think Brazilian authorities have acted today to try to calm things down by devaluing but it's certainly a risk and I think people are somewhat concerned at the minute - understandably so. "
SUPER CAPTION: Tim Huddart, Director of Global Securities Research

The jitters over Brazil also effected early trading in New York.

The Dow Jones industrials were off 185.88 at 9,288.80 after having been down more than 250 points in earlier trading.

Bond prices rallied as investors sought safer investments.

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