Post date: Aug 11, 2011 2:37:9 PM
French markets fall in morning trade on worries over French banks' exposure to euro zone debt.
Another nervous day on French markets, a day after bank stocks saw huge losses amid rumours France could lose its Triple-A credit rating.
Those rumours were dismissed by credit agencies Moody's and Fitch.France's CAC Index was down more than 2 per cent in Thursday morning trade, undoing early gains, due to persistent concerns about the outlook for French banks, among the most exposed to euro zone debt.
KBL Investment Fund Manager Dominique Dequidt.
INVESTMENT FUND MANAGER AT KBL RICHELIEU, DOMINIQUE DEQUIDT, TALKING ABOUT SOCIETE GENERALE AND FRENCH BANKS, SAYING:
"The markets today are in a phase of extreme volatility, of lacking confidence as much in the political sphere as in the monetary movers and we can see very well that the lack of confidence is being carried out across the whole market, with the most susceptible to this confidence being the banking sector."
Shares in Societe Generale fell 15 per cent on Wednesday and were falling even further on Thursday afternoon.
The Governor of the Bank of France says French banks are solid, with adequate capital levels.
But that hasn't stopped one bank in Asia cutting credit lines to major French lenders and five other banks in Asia reviewing their exposure.
Chris Hughes is from Reuters Breaking Views.
ASSISTANT EDITOR, REUTERS BREAKING VIEWS, CHRIS HUGHES SAYING:
"There are reasons, not withstanding what we've heard from the ratings agencies saying there's no, you know, immediate moves to downgrade France and shed it of its AAA rating, you know it does have high debt and deficit and it has been - whilst it has a tough plan in place, it could go faster."
The French government held emergency talks on Wednesday, with French President Nicolas Sarkozy ordering his ministers to find new ways to cut the deficit.
Kirsty Basset, Reuters.