MercoPress. South Atlantic News Agency

World markets plunge on Goldman Sachs downgrading Citibank

Global markets slumped on Monday

Global markets slumped Monday amid fears over the fallout of the credit crisis, after Goldman Sachs downgraded Citibank and forecast 15 billion US dollars in losses from the US subprime market.

The Dow Jones industrial average fell 217.86 points, or 1.65%, to end at 12,958.93 - its lowest level in three months. The Nasdaq shed 1.33%. London's FTSE lost 170.4 points at 6,120.8 - its biggest drop since the credit crisis peaked in August. European stocks also fell more than 1% in both France and Germany. The benchmark Frankfurt Dax shed 1.3% and the Paris Cac ended 1.7% lower. Goldman Sachs recommended that investors in Citigroup sell their shares, prompting concerns that the impact from the credit crisis could be more dramatic than originally thought. The negative outlook for banking giant Citigroup comes after the bank said it expected to see between 8 and 11 billion in write-downs in the fourth quarter. "It's dreadful. There's been aftershock after aftershock from the credit crisis," said Brian Gendreau, strategist at ING Investment. "A major bank downgrading another major financial institution to 'sell' - that's unusual," he added. Citigroup dropped 5.9% by close of trade. Other finance firms to fall included Bank of America, down 3.5% Worries about more losses to come were also stoked after reinsurance firm Swiss Re announced over a billions Swiss francs in write-downs. Meanwhile in the UK, Northern Rock was the biggest faller, down 21.4% after the institution described bids for the firm as being "materially below" its share price. Other finance firms to fall included Royal Bank of Scotland, down 5.3%, while Alliance & Leicester dropped 4.2%. Latinamerican markets following on Wall Street also experienced significant losses beginning with the emerging Peruvian stock exchange that plunged 5.3%. Brazil's Bosvespa lost 3.52%; Argentina's Merval, 1.64% and Chile's IPSA, 1.96%. Mexico remained closed because of a national holiday.