Banks lead Europe stocks lower; Lloyds slides

[Adsos Letter]

LONDON, March 9 (Reuters) - European shares fell in early trade on Monday, with a key stock benchmark hitting its lowest since September 1996, as banks slipped after the UK government increased its stake in Lloyds Banking Group (LLOY.L).

By 0825 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was down 1.1 percent at 655.06 points, while the broader STOXX 600 .STOXX was down 1.15 percent at 157.69 points, hitting its lowest level since September 1996.

Banks were major losers. Lloyds fell 14 percent after it said over the weekend that Britain would get a stake of up to 77 percent in the bank after agreeing to underwrite 260 billion pounds of risky assets.

"With Lloyds the issue is the government has ownership but not control, so it does not resolve the underlying problem. The government really can not push through policy and it is possible this could be a step towards full nationalisation or suspension of shares as per Northern Rock," said Justin Urquhart Stewart, director at Seven Investment Management.

http://www.reuters.com/article/eurMktRpt/idUSL920539620090309

[readmoreoften]

1. And...it's off.

Eh, for all I know it'll end higher. :shrug: Nothing makes sense.

[amandabeech]

2. Gordon, fire the scum that got you into the mess and be done with it.

Show us how it's done.

Stiff upper lip.

[wuvuj]

3. What to expect?

http://www.hussmanfunds.com/wmc/wmc090309.htm

"The misguided policy response from Washington has focused almost exclusively on squandering public money and burdening our children with indebtedness in order to defend the bondholders of mismanaged financial institutions (blame Paulson and Geithner – I've got a lot of respect for our President, but he's been sold a load of garbage by banking insiders). Meanwhile, I suspect that the little tapes in Bernanke's head playing “we let the banks fail in the Great Depression” and “we let Lehman fail and look what happened” are so loud that he is making no distinction about the form of those failures. Simply letting an institution unravel is quite different from taking receivership, protecting the customers, keeping the institution intact, replacing management, properly taking the losses out of stockholder and bondholder capital, and issuing it back into private ownership at a later date. This is what it would mean for these banks to “fail.” Nobody is advocating an uncontrolled unraveling of major financial institutions or permanent nationalization as if we've suddenly become Venezuela."