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Thursday, August 13, 1998 Published at 10:46 GMT 11:46 UK


Business: The Economy

Europe's shares tumble again

Screens turned red again at the London Stock Exchange

Stockmarkets in Europe crashed again on Thursday over fears of a Russian rouble devaluation and heavy falls in Hong Kong shares.

Almost £20bn was wiped off London shares in early trading. Traders screens turned red as warnings about Russia's dire economic situation hit home.

The FTSE index of leading London shares has plunged 96.6 points to 5635 points by 1015 local time (0915 GMT).


[ image: Frankfurt shares crash again]
Frankfurt shares crash again
European bourses also headed lower.

Frankfurt's DAX index fell 3.0%, and in Paris the CAC 40 index was down 2.0%.

George Soros, the billionaire financier, spooked European markets by warning that the Russian rouble would have to be devalued to head off economic crisis.

Dealers are also concerned that the Asian economy is still in deep trouble, and this could have serious repercussions for Western companies.

Most Asian stockmarkets suffered another sharp fall on Thursday.


[ image: Hong Kong shares have collapsed]
Hong Kong shares have collapsed
Stocks in Hong Kong, Singapore and Malaysia fell sharply as the continued weakness of the region's currencies prompted fears that China would devalue its currency, the yuan.

That could spark a fresh currency crisis, leading to another wave of devaluations across the region.

The Hang Seng index in Hong Kong closed 2.9%, or 199.06 points, lower at 6,660.42 after trading as low as 6,544.70.

Recovery short-lived

Hopes that a recovery in US shares on Wednesday would calm traders nerves in London proved to be short-lived.

"The picture has reversed completely, there's pressure on emerging markets and speculation of a devaluation of the rouble," said Markus Herrmann, fixed income analyst at Deutsche Morgan Grenfell in Frankfurt.

The Dow Jones Industrial index closed at 8,552.96, up 90 points, or 1.1% on Wednesday.

Concern over yen

Traders continued to keep a close watch on the yen after it plunged to a fresh eight-year low against the dollar earlier this week.

Rhetoric in support of the yen from several senior Japanese officials and Prime Minister Keizo Obuchi failed to bolster the currency for long.

It broke through the ¥147 to the dollar barrier again on Thursday, although it strengthened slightly in late trade in Tokyo.



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