YEREVAN, August 19. /ARKA/. World stock markets having restored their positions to some extent by mid-week and on Thursday returned to precipitous fall against the backdrop of negative information from the U.S. and the unstable economic situation in Europe. General pessimistic mood of investors leads to panic in the trading platforms in Russia and in other countries, RIA Novosti reported.

IT ALL STARTED FROM FEDERAL RESERVE

At the beginning of the trading day on Thursday information on disagreements of financial authorities of the U.S. influenced on the moods of the investors.
Last week, the regulator published regular “update” on monetary policy. In particular, the regulator announced its decision to hold the benchmark interest rate at a record low level to mid 2013.

On Wednesday, the head of the Federal Reserve Bank (FRB) of Philadelphia Charles Plosser said that the decision to keep the base rate for such a long time was “inappropriate” and adopted in a “wrong time”. "It would be better to show a little patience”, he said in the interview to Bloomberg Radio. According to Plosser, the question of whether to further stimulate the economy, in particular in the format of the first stage of quantitative easing, remains open. Plosser appeals to unemployment data which fell in July to 9.1% - the lowest level since November 2010.

He was supported by the head of the Federal Reserve Bank of Dallas Richard W. Fisher who opposed any significant action to protect investors from market volatility. At the same time, Fisher as Plosser voted against the decision of FRB at the rate of August 9.

In addition, on Thursday it was reported that by the assessments of the bank Morgan Stanley, “insufficient” response of European authorities to the debt crisis of eurozone and reduced trust of investors in the economy of the region may force European Central Bank to lower the interest rates to 1% from the current 1.5% to the end of 2012. The forecast of world GDP for the current year to 3.9% from 4.2% in 2012 was also revised.

BANKING SECTOR SWAPPED

The leaders of the fall on Thursday became the papers of credit organizations of eurozone. According to the auctions, the shares of BNP Paribas fell by 6.8%, Commerzbank AG – 8.4%, Credit Agricole – 7.3%, Barclays Plc. – 10.9%, Societe Generale – 12.3%.

On Thursday, media reported that supervisory bodies of the U.S. because of fears of eurozone debt crisis conducted checks in representations of the banks of Europe in the country. Federal Reserve Bank of New-York in recent days is conducting additional meetings with their managers in order to assess the level of vulnerability of credit organizations in the view of growing pressure of the markets. FRB

requires more information on the level of capitalization and its reliability from the banks in order to make recommendations for its increase if necessary.

PESSIMISTIC STATISTICS

The negative dynamics of the indices on Thursday was related to both the European and U.S. statistical data. For example, the UK Office for National Statistics states that retail sales in the country in July rose by 0.2% on monthly basis and remained unchanged on annual basis. These data disappointed the experts who believed that the sales in July rose by 0.4% compared to June and by 0.1% - on annual basis.

Sales of secondary homes in the U.S. in July fell by 3.5% compared to June – up to 4.67 million trades. These data were significantly worse than the forecasts of analysts who expected growth of the indicator by 2.7% - to 4.9 million transactions.

Data from the real estate market have increased pessimism of investors regarding the rates of recovery of the world’s largest economy after it became known that inflation in July 2011 in the U.S. remained unchanged on annual basis compared with June and amounted to 3.6%, although the experts have expected it to slow down to 3.3%. The indicator increased by 0.5% on monthly basis which also disappointed the analysts who expected more modest growth – by 0.2%.

The number of initial claims for unemployment benefits in the U.S. for the week ended on August 13 and increased by 9 thousand amounting to 408 thousand. Thus, the data were worse than expected: experts have expected an increase of the indicator only by 5 thousand – up to 405 thousand with unreviewed figure of 400 thousand.

DISAPPOINTING RESULTS

Russian market of shares closed the auctions on Thursday falling by 4-5% on weak statistics from the U.S. The index of Moscow Inter-banking Currency Stock Exchange dropped by 3.73% to closing date making 1452.83 points, index RTS – by 4.79% to 1584.20 points. The situation stirred up also by the fall in oil prices, negative trend of which during the day reached more than 5% by the mark WTI, by Brent - about 2-3%.

Leading European stock indices closed on Thursday with an abrupt fall in indices on the background of a collapse of quotations of the largest banks of the region, as well as negative statistical data from the U.S. By the end of the trading session, French index SAS 40 fell by 5.48% - to 3076.04 points. British FTSE 100 has fallen by 4.49% and amounted to 5092.23 points. German DAX lost 5.82% making 5602.80 points. Significant trend also showed stock indicators of Milan and Madrid.

U.S. stock markets opened trading on Thursday by lower prices of 2-3% on the background of statistics on inflation and labor market in the country. During the bidding, they accelerated the decline of indices to 4-5% after the publication of weak statistics on the secondary real estate market in the country. Index DJIA at 18.37 Moscow time has fallen by 4.08% making 10944.57 points. The index of large market S&P 500 lost 4.36% and was on the level of 1141.81 points. NASDAQ index of high-tech companies increased by 4.72% - to 2393.30 points.

PAINFUL EXPECTATIONS

"Honestly, I do not see any explanation for the rapid decline of the share market today. It seems that the investors are in a gloomy mood”, said analyst of Raiffeisen Research Joerg Angele

The closest statistic that can attract the attention of the markets will appear not earlier than in two weeks, the analyst said. However, these statistical data may be disappointing by analogy with information in recent days.
"In future few weeks I do not see any “drugs” “that could cure the markets” and change their situation”, concludes Agnele.

The head of analytical department of the company Broco Alexey Matrosov considers that the events on Thursday showed a significant dependence of Russian platforms outside of foreign negative.

"So on Friday we can expect decrease of the Russian market in the range of 1495-1460 points by the index of Moscow Inter-banking Currency Stock Exchange”, assesses Matrosov. .—0-