European markets slide on banking jitters, Fed gloom
January 28 2016 10:58 PM
The Banca Monte dei Paschi logo sits on a window at one of the company’s branches in Rome on Wednesd
The Banca Monte dei Paschi logo sits on a window at one of the company’s branches in Rome on Wednesday. The troubled lender spearheaded the decline in Italian banking shares yesterday, slumping 9.81%.

AFP/London

European stock markets slid yesterday as investors reacted to the US Federal Reserve’s gloomy economic outlook and troubled banks in Italy. 
The US central bank has painted a grim picture of the world’s biggest economy but still left open the door for another rate hike in March. 
The Fed said US economic growth slowed late last year and that it was concerned about ongoing global weaknesses, in statements on Wednesday after its first monetary policy meeting since lifting interest rates in December. 
“There is no doubt that the economic outlook has become a little bit gloomier since December so a slightly more cautious statement was to be expected, and that’s precisely what we got,” said CMC Markets analyst Michael Hewson. 
Also weighing on market sentiment in Europe was Italy’s banking sector whose shares dived again yesterday amid concerns over consolidation and the latest proposal for dealing with bad loans. 
“It’s the Italian banking sector which is the cause of investors’ jitters,” said Frederic Rozier, management advisor at Meeschaert Gestion Privee in Paris. 
Frankfurt closed down 2.44% and Paris lost 1.33%. And in London the benchmark FTSE 100 index finished the day down 0.98%. 
Europe’s heaviest faller was Milan, which plunged 3.49% to close at 18,190 points, on concerns over Tuesday’s agreement between Italy and the European Union to create a “bad bank” vehicle to help Italian lenders sell their bad loans. 
“Their banking sector is taking another hit,” said analyst Manoj Ladwa at brokers TJM Partners. “It looks like a bad bank solution for bad loans may not be as popular as previously thought,” he told AFP. 
Lender Banca Monte dei Paschi di Siena (BMPS) spearheaded the decline, its shares slumping 9.81%, followed by Banca Popolare di Milano which lost 7.88% and Unicredit slid 6.48%. 
US stocks meanwhile were mixed around mid-day in New York after gains in early trade over a surge in oil prices after Russia said it would meet with Opec over the depressed crude market. 
The Dow Jones Industrial Average slipped 0.07%, and the S&P 500 index fell 0.10%, while the Nasdaq Composite was up 0.39% . 
In Asia, Tokyo shed 0.7% on the eve of the Bank of Japan’s latest monetary policy announcement. 
The worst performer was Shanghai, which plunged 2.9% on worries about the nation’s faltering powerhouse economy. 
Mainland Chinese investors seemed unmoved by a decision by the People’s Bank of China (PBoC) to pump $52bn into financial markets to ease liquidity problems leading up to the Lunar New Year break. 
On the upside, Hong Kong stocks rose 0.8% thanks to late buying. 
Asian tech suppliers were meanwhile hit hard as South Korean giant Samsung Electronics posted a 40% collapse in quarterly net profit, a day after rival Apple recorded its weakest ever rise in iPhone sales.

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