European stocks fall as Lehman posts massive write-downs (AFP)
10.09.2008 18:20 Finance
Lehman's announcement came shortly after South Korea's state-run Korea Development Bank said it had abandoned negotiations on buying a stake in the troubled financial group.
European share prices also fell as oil prices rebounded back above 100 dollars after OPEC had decided to cut its crude production, traders said.
In late afternoon trade, London's FTSE 100 index of leading shares was down 0.59 percent at 5,383.90 points, Frankfurt's DAX 30 slid 0.10 percent to 6,227.22 points and in Paris the CAC 40 shed 0.29 percent to stand at 4,280.90.
The DJ Euro Stoxx 50 index of leading eurozone shares slipped 0.15 percent to stand at 3,256.23 points.
In foreign exchange trading, the euro fell to 1.4115 dollars after the European Commission warned that the eurozone was on the brink of recession.
ECB President Jean-Claude Trichet meanwhile said Wednesday that inflation in the 15 countries sharing the euro was "likely to remain" high despite a pull-back from a record 4.0 percent in July.
Lehman Brothers unveiled an estimated 3.9-billion-dollar loss in its fiscal third quarter on further writedowns from the real estate meltdown as it took a series of restructuring actions.
The beleaguered firm, in desperate need for a cash injection to shore up its finances, offered no new initiatives on that front but announced plans to restructure to slash its exposure to the real-estate sector.
Elsewhere, oil prices rebounded after the OPEC oil cartel cut production by more than 500,000 barrels a day. Higher crude prices increases companies' costs.
After a marathon meeting into the early hours of Wednesday, OPEC president Algerian Energy Minister Chakib Khelil said the output cut would start immediately.
"If you do your own calculations, it is a cut of 520,000 barrels per day," said Khelil, announcing a new OPEC output quota of 28.8 million barrels per day.
The cut immediately boosted prices, which had fallen below 100 dollars a barrel on Tuesday, but was likely to dismay consumers hoping for inflation pressures to be eased.
Japanese shares closed down 0.44 percent on Wednesday.
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