Japanese crisis hits European energy and insurance shares

Japanese crisis hits European energy and insurance shares

 

Auto Insurance Quotes Compare: Japanese crisis hits European energy and insurance shares


FRANKFURT — Stocks in European insurers and power companies tumbled Monday while solar and wind shares advanced as markets tried to forecast how they will fare given the disasters and nuclear crisis in Japan.

Explosions at the Fukushima Daiichi nuclear power station northeast of Tokyo after Friday's 8.9-magnitude quake and horrifying tsunami have thrown a stark spotlight on the nuclear sector.

With debate still simmering over an extension of German nuclear power plants, German Chancellor Angela Merkel declared a three-month moratorium on plans to extend their operation.

In late Frankfurt trading, shares in the two biggest German power companies, EON and RWE, showed respective losses of 6.43 percent at 21.60 euros and 5.21 percent at 45.43 euros.

The DAX index on which they are listed was off by 1.75 percent overall.

Nuclear power produces about 25 percent of the electricity used by Europe's biggest economy, and energy groups had obtained authorisations last year to extend the working life of existing plants, despite stiff public opposition.

Alternative energy companies got a boost meanwhile, with Solarworld showing a jump of 10.48 percent to 8.44 euros and Conergy leaping 23.55 percent at 0.38 euros. The wind energy firm Nordex gained 16.10 percent to 6.75 euros.

Siemens, the industrial giant that makes both nuclear reactors and wind turbines, shed 1.93 percent to 89.5 euros.

In France, where nuclear provides 75 percent of electricity, shares in the public company Areva were down 7.46 percent in late trading.

French Industry Minister Eric Besson had nonetheless stressed that the country's powerful nuclear industry was "permanent" and "legitimate."

Italian power giant ENI showed a more modest loss of 2.41 percent at 17.04 euros, meanwhile.

Earthquake-prone Italy rejected nuclear power in a 1987 referendum after the disaster in Chernobyl, Ukraine, but Rome has been thinking about hitting the reset button.

The sector facing the most short-term financial damage from events in Japan is insurance, and especially re-insurance groups that back up commercial life and property insurers.

Some losses will likely to be made up later however in higher premiums.

The international ratings agency Moody's said: "Estimating claims will be a protracted process, as the size and scope of the event will place significant strain on insurers' claims adjustment resources."

A statement from Lloyd's in London added: "Our efforts will be focused on dealing with claims quickly and helping people and businesses recover."

Shares in the world's biggest re-insurance group, Munich Re, plunged by 4.03 percent to 107.25 euros in Frankfurt, while general insurer Allianz had lost 2.27 percent to 97.55 euros.

On Friday, Munich Re had already lost 4.28 percent and Allianz 2.14 percent.

The re-insurance group Hannover Re showed a loss Monday of 1.95 percent to 37.89 euros, after shedding 5.28 percent on Friday.

Swiss Re shares were down by 4.82 percent to 49.21 Swiss francs on Monday, while the French group SCOR was 2.29 percent lower at 26.92 euros in Paris.

A risk analysis by AIR Worldwide said the Japanese quake alone, excluding tsunami damage, could exact a financial toll of up to $34.6 billion (25 billion euros).

UniCredit analysts added that "the possible medium-term implications of the nuclear accidents are more important than the initial devastation caused by the earthquake and the tsunami as such."

UniCredit noted by way of comparison that the US hurricane Katrina had caused insured losses of 47.1 billion euros ($65.8 billion), while the biggest financial toll to date from an earthquake, the Californian Northridge quake in 1994, totaled 11.6 billion euros.

Posted by Nikkei 225 at 10:23
Labels: