World financial crisis

French confidence down, as world markets fall again

Article published on the 2008-10-23 Latest update 2008-10-23 10:44 TU

Trading in Shanghai
(Photo: Reuters)

French business confidence has slumped to its lowest since 1993, according to the national statistics agency, Insee. All Asian stockmarkets saw serious losses on Thursday and the Paris bourse fell 0.77 per cent on opening Thursday after a 5.1 per cent drop on Wednesday.

Insee showed a drop in its monthly index of business confidence from 91 to 88 points and warned of worse to come.

It is the biggest drop since 1993 and came as the state statisticians also predicted a second quarter of negative growth, technically a recession. The French economy shrank 0.3 per cent in the second quarter of the year and Insee predicts a further 0.1 per cent drop for both the remaining quarters of 2008.

The French government's financial agency, the Deposits and Consignation Fund, is to make a first bridging loan of ten billion euros to the country's banks, according to two financial dailes, Les Echos and La Tribune.

Cross-border bank lending fell 0.8 trillion euros in the second quarter of 2008, according to Switzerland-based Bank for International Settlements, which reported that nearly as much was withdrawn by clients, particularly in the US, Britain and Switzerland in the same period.

All Asian markets saw serious losses on Thursday, with South Korea the worst hit at 7.4 per cent.

Japan's central bank has injected 4.8 billion euros into the short-term money market, while the International Monetary Fund started talks with Pakistan, which could need as much as 12 billion euros to help handle its foreign debt.