Stock markets face effect of banking crisis

5 November 2007

World stock markets are preparing to face heavy falls after confidence in the US banking sector was rocked with the news that Charles Prince has resigned from Citigroup.

The Asian markets fell in response to the news, the Hang Seng index dropping by five per cent and the Nikkei losing 248.56 points and dropping 1.5 per cent.

European markets also saw falls, the FTSE 100 was down 37 points while the Dax fell 56.05 points.

Worries over the sub-prime crisis have lingered for months and the news will not restore any stability to the current climate.

Speaking to the BBC, William Claxton-Smith, from Insight Investment, expected a nervous day of trading on Monday.

"The market is very concerned about what is going on in the banking sector. The big problem is the uncertainty that nobody really seems confident that anyone has got a handle on what is happening."

Pre-tax losses of $11 billion were disclosed by Citigroup prompting Mr Prince to make his departure.

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