A key European stock index fell to a lifetime closing low on Tuesday, led lower by oil stocks as crude prices slipped towards $40 a barrel. The FTSEurofirst 300 fell 1.9 percent to 669.64 points, the lowest close since the index's inception in July 1997. It has fallen for seven of the last eight sessions.
The broader STOXX 600 benchmark fell 1.8 percent, having hit lows not seen since late 1996. "There is disappointment that the interventionist policies of governments aren't coming together fast enough," said Mike Lenhoff, chief strategist at Brewin Dolphin. European credit default swap spreads widened sharply on Tuesday, in response to the deteriorating economic climate and growing financial industry losses.
Crude prices, which slumped 10 percent on Monday, failed to stage a recovery and hovered about the $40 mark amid worries about demand in the face of world-wide economic slowdown. BG Group closed 6 percent lower as its planned take-over of Australian coal seam gas firm Pure Energy moved closer.
BP fell 4.3 percent after announcing it would scale back its near-term oil and gas production growth target, as falling oil prices prompt the company to rethink investment plans. Total, Royal Dutch Shell and Statoil were between 2.2 percent and 4.8 percent lower.
Bank stocks, among the worst affected by the stock slump that has accompanied the crisis on the world's credit markets, were broadly lower. HSBC which slumped 18.8 percent after announcing a 12.5 billion pounds rights issue on Monday, fell another 1 percent. Societe Generale, Lloyds, Credit Suisse and Barclays were down between 2.5 percent and 7.9 percent.
Standard Chartered was a rare gainer among the banks, putting on 7.3 percent after the group said 2008 profit rose 19 percent. Shares in Danish ingredients group Danisco fell 18.4 percent after the company cut its full-year profit expectations and said it would lay off 200 employees due to lower demand for its products. Index heavyweight Nestle fell 4 percent. Across Europe, the FTSE 100 index finished 3.1 percent lower, Germany's DAX was down 0.5 percent, while France's CAC 40 fell 1 percent.
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