After a day of pummeling on the markets on Wednesday, French bank stocks led world markets lower once again on Thursday as investors fearing contagion in the euro zone turned their attention to Paris. Exposure to debt from Greece and other peripheral euro zone countries, as well as dim growth prospects, have contributed to losses in bank stocks in the zone, down nearly 30% for the year.
On Wednesday a New York Times report said that worried investors had focused on France as possibly the next AAA country to experience a downgrade in its rating. Despite statements from all three major raters, Standard & Poor’s, Moody’s and Fitch, that the country’s credit rating was not in jeopardy, and despite a statement from the French government as well, panic overrode reason and the country’s bank stocks, particularly Société Générale, its second largest, plummeted. SocGen at one point was down 21% before recovering a bit to close down 14.7%. BNP Paribas, France’s largest bank, saw its shares lose 9.5%.
The rout continued Thursday, with bank stocks leading European exchanges lower. In morning trading SocGen was down more than 8%, with BNP Paribas down 5.5% and Credit Agricole also losing ground.