European markets trading weak

European markets were trading weak. CAC 40 plunged 2.62% or 113.92 points at 4,228.67.

DAX tumbled 2.45% or 156.51 points at 6,239.24.

FTSE 100 fell 2.75% or 151.50 points at 5,361.20.

Ian Hartnett of Absolute Strategy spoke exclusively on CNBC-TV18:

Q: Are these worries entirely settled or settling around the credit market problems?

A: It is a combination of concerns about credit markets plus also the follow-through into the real economy and particularly those very disappointing German industrial production numbers yesterday, where growth decelerated from 5% to below 1% in just one-month YoY.

Q: What about the news about the bond insurers looking at liquidity issues and looking at raising cash essentially? How do you think that’s settling down with the financial stocks in Europe?

A: The financials are still clearly under pressure and in London, despite the fact that a number of UK banks are now on dividend yields of over 12%, people have still very wary about taking the onboard. So, there is no certainty about earnings outlook for either this year or 2009. It is just encouraging people hold back. But I do think that today has the feel very much of a capitulation trade.

Q: Is there panic selling that is happening in Europe right now?

A: It is certainly feels as though that there is a very high level of nervousness. The way that the stock market is just fallen away this morning, it is indicative. We are now down probably 24% for the major European indices so far this year. Our target is around about the 30% before we can start to feel more comfortable about buying. But certainly it does feel today as though there is a sense of real concern.