FRANKFURT: Stocks in European insurers and power companies tumbled Monday as markets tried to calclate how hard they will be hit by the natural disasters and nuclear crisis in Japan.
Explosions at the Fukushima No. 1 nuclear power station north of Tokyo and the failure of a cooling system following Friday's 8.9-magnitude quake and horrifying tsunami have thrown a stark spotlight on the nuclear sector.
With debate over the extension of German nuclear power plants still fresh, the energy industry here and elsewhere in Europe could now find it hard to convince the public that nuclear energy is a safe, long-term option.
In midday Frankfurt trading, shares in the two biggest German power companies, EON and RWE, were showing respective losses of 3.73 percent to 22.22 euros and 3.96 percent at 46.03 euros.
The DAX index on which they are listed was off by 0.78 percent overall.
Nuclear power accounts for roughly 25 percent of the electricity used by the biggest European economy, and energy companies have obtained authorisations to extend the working life of existing plants, despite stiff public opposition.
Solar panel maker Solarworld showed a leap of 13.97 percent to 8.70 euros as some minds turned to alternative energy sources.
In France, where nuclear provides 20 percent of the country's energy, about the same level as in Britain, shares in the public company Areva were off by 8.6 percent in midday trading.
French Industry Minister Luc Besson said he was concerned by the situation in Japan but stressed that France's powerful nuclear industry was "permanent" and "legitimate."
Shares in the Italian power giant ENI were off by a much more modest 0.57 percent at 17.36 euros, meanwhile.
Earthquake-prone Italy rejected nuclear power in a 1987 referendum after the disaster in Chernobyl, Ukraine.
But Foreign Minister Franco Frattini said: "We have to think about what would happen if we don't equip ourselves with the latest nuclear energy and therefore clean energy."
The sector which is likely to face the biggest short-term financial damage is insurance, and especially re-insurance groups that back up commercial life and property insurers.
Some of that is likely to be made up later however owing to higher premiums.
The international ratings agency Moody's said in Tokyo that "estimating claims will be a protracted process, as the size and scope of the event will place significant strain on insurers' claims adjustment resources.
"Moreover, aftershocks could last for weeks, causing additional insured losses," analysts James Eck and Kenji Kawada wrote.
Shares in the world's biggest re-insurance group, Munich Re, plunged by 3.67 percent at 107.65 euros in Frankfurt, while general insurer Allianz had lost 1.72 percent to 98.1 euros.
On Friday, Munich Re had already lost 4.28 percent and Allianz 2.14 percent.
On the MDax index the re-insurance company Hannover Re showed a loss early Monday of 3.39 percent to 37.33 euros, after shedding 5.28 percent on Friday.
Swiss Re shares were down by 3.68 percent to 49.80 Swiss francs, the biggest loser on the Swiss Market Index, while the French group SCOR was essentially unchanged in Paris.
On Sunday a risk analysis by AIR Worldwide said the Japanese quake alone could exact an economic toll of up to $34.6 billion (25 billion euros).
A Munich Re statement said however that the subsequent crisis at Fukushima No. 1 "will probably not significantly affect private insurers."
Analysts at 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 from an earthquake, the Californian Northridge quake in 1994, totaled 11.6 billion euros.
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