German banks ran into wall of worries over the mounting financial crisis in Turkey where overnight money market rates have now climbed above 200 per cent. The big German lenders are by far the most heavily exposed sector to Turkey with figures from the Bank for International Settlements pointing to $11 billion of Turkish debt, against closer to $4 billion each for French and US banks.
With Turkish bond yields soaring and the Istanbul equity market sliding more than 9 per cent to an 11-month low, there was no shortage of alarm bells ringing in Frankfurt yesterday.
Deutsche Bank fell 2.3 per cent to €87.89 in robust volume of 2.6 million shares. Dresdner Bank fell 3.7 per cent to €44.60 and Commerzbank 1.2 per cent to €30.54. HypoVereinsbank lost 2.6 per cent at €60.52.
Europe's growth sectors went into reverse yesterday, putting an end to three days of upward movement. The worst performers were technology, telecoms, media and related sectors such as IT services and Internet companies. On the Eurotop indices, the computing sector, containing the likes of SAP, Sema Group and Terra Networks, was down almost 6 per cent. SAP itself fell about 6 per cent to 173 with Schroders Salomon Smith Barney cutting its 12-month price target on the stock from €175 to €125.
France Telecom fell 5 per cent to €104.40 after it announced that Hans Snook, the highly-regarded chief executive of its mobile unit Orange, would step down next year after Orange's flotation, which has moved back to some time before the end of March amid worries about market conditions.
Among other telecoms, Deutsche Telekom fell 3.4 per cent to €38.71 and Telefonica fell 4.7 per cent to €18.20, while equipment maker Nokia was off 2 per cent at €49.56. Telefonica announced yesterday it had awarded the first phase of construction contracts for third generation mobile networks to Nokia, Ericsson and Motorola.
The Internet stocks were clearly suffering yesterday. Europe's market leader T-Online fell 7.5 per cent to €16.93, another all-time low and more than 50 per cent down on the 35 launch price in April. Terra Networks fell 9 per cent to €16.42 and Wanadoo about 4 per cent to €12.20.
DaimlerChrysler sank close to a four-year low at one stage on concern about US litigation, but the shares managed a modest rally in late trading to close at €46.76, down 1.1 per cent.
