Global stocks fall on credit fear

Global stocks have slumped amid fears over the fallout of the credit crisis, after Goldman Sachs downgraded Citibank and forecast $15bn (£7.3bn) in losses.
The Dow Jones industrial average fell 217.86 points, or 1.65%, to end at 12,958.93 - its lowest level in three months. The Nasdaq shed 1.33%.
London's FTSE lost 170.4 points at 6,120.8 - its biggest drop since the credit crisis peaked in August.
European stocks also fell more than 1% in both France and Germany.
The benchmark Frankfurt Dax shed 1.3% and the Paris Cac ended 1.7% lower.
"It is once again the financial sector that has led to the latest bout of nervousness," said Phillip Vorndran, strategist at Credit Suisse Asset Management.
'Aftershock'
Goldman Sachs recommended that investors in Citigroup sell their shares, prompting concerns that the impact from the credit crisis could be more dramatic than originally thought.
The negative outlook for banking giant Citigroup comes after the bank said it expected to see between $8bn and $11bn in writedowns in the fourth quarter.
"It's dreadful. There's been aftershock after aftershock from the credit crisis," said Brian Gendreau, strategist at ING Investment.
"A major bank downgrading another major financial institution to 'sell' - that's unusual," he added.
Citigroup dropped 5.9% by close of trade. Other finance firms to fall included Bank of America, down 3.5%
Worries about more losses to come were also stoked after reinsurance firm Swiss Re announced $1.07bn Swiss francs in writedowns.
Meanwhile in the UK, Northern Rock was the biggest faller, down 21.4% after the institution described bids for the firm as being "materially below" its share price.
Other finance firms to fall included Royal Bank of Scotland, down 5.3%, while Alliance & Leicester dropped 4.2%.
Wider impact
But it was not just finance firms that were hard hit on Monday.
Auto firms and airlines also saw their stocks decline, as fears over the slowing US housing sector fed into wider concerns about the state of the US economy.
GM saw its stock at its lowest for nearly 18 months, at $26.57, and fell 8.5%v overall to end at $26.79.
Delta Airlines dropped 4.8% and Continental Airlines shed 6%.

http://news.bbc.co.uk