European stocks resumed their downward trajectory Thursday, wiping out the previous session’s gains, after Carlyle Capital defaulted on about $16.6 billion of debt, unsettling investors.
Wall Street managed to pull back from early losses, despite disappointing U.S. February retail sales adding to the gloomy outlook. Asian stocks suffered the worst of the global selloff in the wake of Carlyle Capital's default, which brought concerns over tight credit markets back to the forefront.
Carlyle Capital faced $400 million in margin calls recently and said it has now defaulted on $16.6 billion of debt, left with just mortgage-backed securities as assets which it expects to be seized.
Banking stocks were among the hardest hit in Europe, with the Dow Jones STOXX banking index off nearly 3 percent.
Looking to corporate happenings, Swiss food behemoth Nestle raised its target for 2008 sales growth after a strong start to the year. Shares jumped 6.2 percent on the news.
Shares of Italian bank UniCredit fell 4.1 percent after it reported 2007 profit below analyst expectations.
British building products company Wolseley was the biggest loser on the FTSE-100, falling 6.3 percent after Goldman Sachs cut the stock to "sell" from "neutral" based on expectations for more weakness in U.S. homebuilding.
And in Germany, auto parts supplier Continental lost 4.8 percent after a report that problems at its powertrain business are worse than expected.
And German Automaker BMWposted full-year earnings ahead of expectations and reiterated its aim to boost unit sales at all three of its brands this year.
In the energy market, crude oil prices hovered near $110 a barrel, pushed higher in part by weakness in the dollar.