AAL, VED, ENRC lead miners lower in London

European equities markets declined Tuesday after US Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that if Congress fails to pass the government’s $700 billion plan to buy bad debts from banks, markets and the economy could be harmed.

Mr. Bernanke characterized financial markets as currently under “extraordinary stress”.

Despite Mr. Bernanke’s warnings, however, some lawmakers on both sides of the aisle were wary of the plan.

Declines also came as commodities related shares fell on declines in the prices of crude oil and metals.

In London, the FTSE 100 was down 1.91 percent to 5,136.12 while the FTSE 250 dropped 3.41 percent to 8,454.58.

Some miners saw significant declines led by Anglo American (LSE: AAL), which was down 8.21 percent while Vedanta Resources (LSE: VED) fell 10.39 percent and Eurasian (LSE: ENRC) dropped 11.43 percent.

Punch Taverns (LSE: PUB) led the travel and leisure sector lower while the oil sector, most banks and the retail sector were down as well.

The FTSE Eurofirst 300 was down 1.52 percent to 1,109.93 as the Dax fell 0.64 percent to 6,068.53, the IBEX was 1.34 percent lower to 11,176.5 and the CAC-40 dropped 1.98 percent to 4,139.82.

Airlines were lower, with Air France-KLM (Euronext: AF; NYSE: AKH) down 3.99 percent as Lufthansa (FWB: LHA) fell 4.89 percent.

The semiconductors sector was mixed with Infineon (FWB: IFX) up 1.33 percent while STMicroelectronics (Euronext: STM; NYSE: STM) dropped 5.11 percent.

Most equities markets in the Asia-Pacific region were lower Tuesday as investors worried that the US plan to buy up bad debts from banks will not be enough to avoid a recession.

Taiwan’s Taiex managed to add 1.17 percent to 6,182.21 and South Korea’s Kospi gained 1.44 percent to 1,481.37 and Tokyo’s markets were closed for a public holiday, but other markets saw declines.

The Shanghai Composite was down 1.56 percent to 2,201.51 while in Australia the Sydney Ordinaries fell 1.83 percent to 4,957.7 and the S&P/ASX200 was 1.93 percent lower to 4,923.5.

In Singapore, the Straits Times Index was down 2.66 percent to 2,476.51 while India’s Sensex fell 3.03 percent to 13,570.31 and the Hang Seng dropped 3.87 percent to 18,872.85 in Hong Kong.

In Hong Kong trade, China Mengniu Dairy Co. (SEHK: 2319) dropped 60 percent on findings that its products contain melamine, the chemical implicated in the deaths of four infants and the hospitalization of thousands of others, while on the Shanghai exchange Inner Mongolia Yili Industrial Group (SSE: 600887) fell the exchange limit of 10 percent when it became known that its products also contain the chemical.

Goldman Sachs (NYSE: GS) cut its recommendation on both companies to “sell”.

Monday’s surge in crude oil prices hurt airlines, with Australian carrier Qantas (ASX: QAN) down 2.4 percent and China Southern Airlines (SEHK: 1055; SSE: 600029; NYSE: ZNH) dropped 5.6 percent in Hong Kong trade.

Banks were also lower in the region, but some miners saw gains.

At just before 1 p.m. in New York, the Dow Jones Industrial Average was 0.26 percent lower to 10,986.62 while the Nasdaq Composite was down 0.1 percent to 2,176.73 and the S&P 500 had dropped 0.36 percent to 1,202.71.

The declines came after early gains and came as declines in commodities-related shares outpaced gains in the technology sector.

Banks were lower as Fed chairman Ben Benanke and Treasury Secretary Henry Paulson continued their testimony before the Senate Banking Committee, with Bank of America (NYSE: BAC) down 5.77 percent as Washington Mutual (NYSE: WM) fell 6.01 percent and Citigroup (NYSE: C) dropped 7.4 percent.

Story link: AAL, VED, ENRC lead miners lower in London