National City drops 52 percent as market wonders who's next
NEW YORK (Reuters) - Shares of National City Corp dropped more than half on Monday as investors wondered which regional bank might need a merger partner as the sector suffered what analysts called a deepening crisis of confidence.
The big Ohio bank slid $2, or 52 percent, at $1.70 on the New York Stock Exchange. The stock fell more than 25 percent on Friday.
"There are a number of regional banks which may need help, either because of the weakening mortgage market or simply because of the weakening economy," said Michael Sheldon, chief market strategist, RDM Financial Group.
"I think it's absolutely a crisis of confidence, there's some real weakness in the economy," he said. "But the larger issue is simply a paralysis of the economy or lack of confidence in financial institutions."
Earlier Monday, Citigroup Inc said it agreed to buy the banking operations of Wachovia Corp -- a deal brokered by the government to ensure "financial and economic stability," Federal Reserve Chairman Ben Bernanke said in a statement.
The closely watched S&P Financial index fell 5 percent, with Fifth Third Bancorp -- another Ohio-based firm -- dropping 20 percent.
Two weeks after the financial crisis reached a new and more serious level, including the disappearance of the traditional Wall Street investment bank, several European bank were rescued on Monday.
Last week, JPMorgan Chase & Co agreed to acquire the assets of Washington Mutual Inc as part of the largest failure of a U.S. bank. The deal made JPMorgan the United States' second-largest bank behind Citigroup.
"The biggest banks are getting too big to fail," said William Larkin, fixed income manager at Cabot Money Management in Salem, Mass.
"That's going to be an issue going forward because obviously there's going to be some new, heavy regulation coming down the pipeline."
NEW YORK - U.S. stocks opened with modest gains on Friday, putting major indexes on track for their fourth straight week of gains, though trading was light going into the Labor Day holiday.
BEIJING/HONG KONG - China reiterated its opposition on Thursday to a European Union plan to limit airline carbon dioxide emissions and called for talks to resolve the issue a day after its major airlines refused to pay any carbon costs under the new law.