A fresh batch of negative financial news led to a new round of falls in European stocks Thursday as the dollar rose sharply in the wake of slumping gold and oil prices, according to dpa. By early afternoon, Europe's blue-chip Stoxx 50 index had lost 1.1 per cent and was trading at 2919 after leading bank shares helped to spearhead falls following Zurich-based Credit Suisse's profit warning and new concerns emerged about mid-sized German IKB Industrie Bank. Adding to the nervous mood on European bourses, Europe's biggest insurer Allianz SE said the turmoil in financial markets could make achieving its profit goals more difficult. In the meantime, a sell-off of key commodities including gold and oil on the back of concerns of declining demand as global growth slows helped the dollar to pull further back from the big falls it ran up earlier this week. After climbing to a record high in recent weeks, oil dropped about 3 per cent below 100 dollars a barrel while gold lost 1.7 per cent to fall through the key 1,000 dollars an ounce mark it hit in the last few weeks. Having fallen towards a record 1.60 dollars against the euro earlier in the week, the greenback gained 1.2 per cent in early afternoon trading in Europe to hover at around 1.5450 dollars. Credit Suisse's warning that it could face a first-quarter loss and a downbeat sentiment survey for Europe's service and manufacturing sectors also helped to undercut the euro. Moreover, while analysts expect the US Federal Reserve to press on with its aggressive rate-cutting cycle, the European Central Bank has signalled that it is in no rush to follow the Fed's lead and trim borrowing costs. The IKB emerged as one of the early casulties of the global credit crisis with the German state development bank KfW forced to mount a rescue for IKB. On Thursday, IKB announced further losses with GfK saying it was planning another capital injection for the troubled bank. IKB's shares plunged more than 10 per cent Thursday after they returned to the market from being suspended. Global investors have been on a roller coaster ride this week as fears about a major global economic slump and the fallout from the US housing market crisis resulted in volatile trading. By early afternoon, Europe's premiere stock market in London was down 1.07 per cent, with the bourses in Paris and Frankfurt having also lost more than 1 per cent. The drop in European stocks also came in the wake of volatile trading with stocks in Shanghai at one point hit by concerns about the fallout for China's booming economy of a US recession. The New Stock Exchange's Dow Jones index closed down 2.4 per cent Wednesday as the optimism triggered by the US Federal Reserve's 75- basis points cut this week faded.
