Europe

18/11/2008

In October, European equities continued to take a battering as companies struggled to cope with the credit squeeze, investor confidence plummeted and lending fears continued to suffocate the financial system. To combat the crisis, the European Central Bank cut interest rates by 0.50% to 3.75%, and governments across Europe took co-ordinated action and made sizeable commitments (guaranteeing to safeguard bank deposits and debts and outlining capital investment plans) in an effort to free up the ‘banking paralysis’ and re-ignite confidence in the markets. The measures succeeded in restoring some confidence, with European equities rallying on the back of initial announcements, and the co-ordinated bail-out ensured that the immediate panic gripping markets subsided. However, investors still remained concerned about the take-up of individual government bail-out offers and the ability of banks to raise capital if required.

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