Markets slumped after london attacks
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Global Stocks, U.K. Pound Slump on London Blasts; Bonds Advance
July 7 (Bloomberg) -- Stocks worldwide slumped after London's public transport system was rocked by six explosions, resulting from an attack by the al-Qaeda terrorist network. The British pound weakened and bonds rose.
``The market is pricing in a more dangerous world,'' said Filip Weintraub, who manages about $1.67 billion in investments at Stavanger Fondsforvalting in Stavanger, Norway.
European stocks had their biggest losses in about two years, as the Dow Jones Stoxx 600 Index sank 2.6 percent to 272.59 as of 12:58 a.m. in London. The U.K.'s FTSE 100 Index tumbled 2.2 percent. Travel-related stocks, including British Airways Plc, and insurers such as Scor SA paced the decline.
September futures on the Standard & Poor's 500 Index plummeted 16.10 to 1182.50. The pound fell to an 18-month low against the dollar. U.S. Treasuries rose, sending the 10-year note's yield as low as 3.93 percent.
Al-Qaeda, the group responsible for the Sept. 11, 2001, attacks in the U.S. that destroyed the World Trade Center and damaged the Pentagon, took credit for the blasts on London's subway and bus systems in a statement on an Islamist Web site.
U.K. Prime Minister Tony Blair said it is ``reasonably clear'' the blasts were designed to coincide with the Group of Eight summit in Gleneagles, Scotland. Blair said he would return to London before heading back to the summit later today.
`All Asset Classes'
The Morgan Stanley Capital International World Index, a global benchmark for stock, slipped 0.7 percent in its biggest decline since May. All but six of the Stoxx 600's members fell, as did all 101 stocks in the FTSE 100.
``Investors are selling all asset classes because they are fearful this could be the beginning of a new terror campaign,'' said Johan Van Geeteruyen, a fund manager at Brussels-based Petercam, which oversees about $9.1 billion.
London closed the public transport system and evacuated subway stations after six explosions in the capital's center and financial district caused at least eight deaths. Five explosive devices were found on the subway network, or Underground, an unidentified firefighter said.
Blasts occurred at financial district Underground stations including Liverpool Street, Moorgate and Aldgate East. Police said explosions were also reported at Kings Cross and Edgware Road stations in central London. A bus exploded near Russell Square, killed at least eight, a firefighter said.
The first explosion was reported at 8:50 a.m. local time, according to Scotland Yard, which wouldn't comment on the possible causes of the explosions.
The Stoxx 600 Travel & Leisure Index dropped 3.8 percent, the biggest decline among the 18 industry groups on the broader benchmark. British Airways, Europe's third-largest airline, fell 4 percent to 261.5 pence. TUI AG, Europe's largest tour operator, shed 3.7 percent to 20.30 euros.
Scor, France's biggest reinsurer, lost 5.8 percent to 1.63 euros. Allianz AG, Europe's biggest insurer, fell 3.5 percent to 94.38 euros. Aviva Plc, the U.K.'s biggest insurer, declined 4.5 percent to 598 pence.
``We don't believe we have any material exposure,'' said Sue Winston, a spokeswoman for Aviva in London. ``We don't have exposure to London underground.''
The benchmark 10-year Treasury note's yield sank as much as 14 basis points to 3.96 percent, according to bond broker Cantor Fitzgerald LP. U.K. 10-year gilt yields fell to a two-year low and yields on German benchmark 10-year bonds reached a record following the reports. Yields move inversely to prices.
The pound fell as low as $1.7404 from $1.7583 late yesterday. Against the euro, the U.K. currency slid as low as 68.92 pence per euro, close to the weakest in five weeks,from 67.83 yesterday.
Prices for gold, considered a haven, rose in London. Gold for immediate delivery in London advanced as much as $5.14, or 1.2 percent, to $428.90 an ounce.
Crude oil slumped the most in seven months, tumbling from a record $62.10 in New York, amid concern that demand will weaken in the aftermath of the blasts. The contract for August delivery sank as much as $4.08, or 6.7 percent, to $57.20 a barrel.
Last Updated: July 7, 2005 08:07 EDT