European shares fell sharply in October, as the ongoing liquidity crunch and weak economic data fuelled recession fears. Sentiment remained weak despite coordinated interest rate cuts by central banks, including the European Central Bank (ECB). Over the month, the ECB extended a €5bn credit line to Hungary, relaxed its collateral rules and provided unlimited longer-term funds. It also increased foreign currency funding to lenders.Governments in France, Germany and Spain guaranteed bank debts and injected capital into distressed lenders. In addition, Germany approved a €500bn bank rescue plan. Europe's economy contracted in the second quarter as corporate investment and consumer spending declined. Business confidence on the Continent fell to a 10-year low. On a positive note, inflationary pressures subsided.We exited Danish non-life insurer Alm Brand and Austrian developer Immofinanz. Using the proceeds, we introduced a new holding - Austria's Vienna Insurance Group, which is conservatively managed. It has a stable domestic base and exposure to the Central and Eastern European markets.
2,517.37p
