Istanbul suicide blasts 26, shake the world's stock exchanges markets

Suspected Islamist suicide car bombers killed at least 26 people and wounded more than 450 in Istanbul yesterday, in a strike against Britain that also shook the world’s financial markets.

The bombings shattered the British consulate and the HSBC Bank headquarters in Istanbul, whereas US President George W. Bush was in London to meet British Prime Minister Tony Blair, his main ally in the war in Iraq. The UK mission’s Consul-General Roger Short was among 15 killed at the British mission.

The attacks shocked world markets, raising fears of more sustained and frequent attacks. European stocks sank and gold, seen as a relatively risk free investment in times of uncertainty, firmed. Also, the Swiss franc gained ground, whereas the US dollar dived.

“Terrorism is back in focus and that is why the market is falling,” said Michael Rachor, from Activest Investment in Munich. “It will hurt the market one or two days,” he added.

The Istanbul stock exchange was closed after the explosions, but not before the stock index had dived 7.4% amid panic sales. When the stock exchange resumed trading, the Turkish lira dropped slightly against the US dollar, losing 0.5%, down to 1,483,000 units for one dollar.

The FTSE Eurotop 300, which comprises some of Europe’s biggest companies, lost several points. At the same time, the DJ Euro Stoxx 50 dropped 0.75%, down to 2,555 points. Before the Istanbul attacks, the two indexes were up 0.3%. The London, Frankfurt and Paris stock exchanges sank immediately.

The blasts also hurt the stock of HSBC, the world’s second-largest banking group, which shed 1.2%. Two of the world’s largest financial conglomerates, Citigroup and Credit Suisse, temporarily shut their Istanbul offices as a security measure yesterday.

Insurers’ stocks were badly hit, as Dutch companies Aegon and ING lost more than 2%. TUI, Europe’s main tour-operator that holds several hotels and resorts in Turkey dived 4%. The Swiss franc, which is viewed as a haven in times of crisis, strengthened to 1.299 per dollar from 1.305. The single European currency took the US dollar’s lead, dropping from 1.555 Swiss francs before the blasts to 1.549.

The dollar briefly weakened to 1.1969 euros, as the White House was evacuated just after an airplane came within five miles of the executive mansion. The pilot was contacted and the situation resolved. The dollar has had a rough week, as fears of new terror attacks made it lose ground against the euro. In fact, the US currency hit a new record-low against the euro.

anca.stoicescu@zf.ro