Big European financial institutions such as Deutsche Bank and Credit Suisse tumbled on Friday, pulling down US counterparts as fears of a contagion effect from a possible Greek default mushroomed. As Wall Street skidded to its worst quarter in three years Morgan Stanley ended down more than 10 percent and the cost of insuring its debt jumped in what traders and investors said were echoes of the financial meltdown in 2008.
Credit Suisse fell 6.2 percent to $26.24 in New York while Deutsche Bank fell 9 percent to $34.61. Investors fear European lenders will be saddled with massive losses if Greece - and potentially others - default on their debt, sending shock waves through the global financial system.
The extent of Morgan Stanley's exposure to Europe was unclear but it is likely to offer detailed information when it reports third-quarter results next month. Sheldon said he was comfortable with positions he owns in Citigroup and JPM Morgan Chase.
The BNY Mellon index of leading American Depository Receipts fell 3 percent, while the Standard & Poor's 500 index fell 2.5 percent. A steep slide on Friday closed out a fifth month of losses on Wall Street as fears of a hard landing in the world's second largest economy joined the potent mix troubling investors after China's manufacturing sector shrank for the third month.
Those fears pressured Chinese stocks traded in the United States as the BNY Mellon index of leading Chinese ADRs fell 2.6 percent. Hong Kong shares slumped on Friday, closing out their worst quarter in a decade. Baidu Inc, the Internet search engine, fell 3.1 percent to $106.91 in New York, after falling nearly 10 percent in the previous session. The stock has dropped 27 percent in the last two weeks. Elsewhere in Asia, a joint venture of Hitachi Ltd and LG Electronics Inc has agreed to plead guilty and pay a $21.1 million fine for bid-rigging and price-fixing in the sale of optical disk drives. Hitachi Ltd shares fell 3.2 percent to $49.42.
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