Europe Economy

FTSE, DAX, CAC to Plunge on Fed Disappointment

European stocks were set to for a deep fall on Thursday after Wall Street's sell-off sparked by worries over the Federal Reserve's grim outlook for the economy.

The FTSE was seen losing 145 points, the DAX was set to open 156 points lower and the CAC was expected to open 87 points in the red.

"Given the overnight negative cues and expectations of weak European data ahead, traders are set to dump equities on the open," Jonathan Sudaria, Night Dealer at London Capital Group said.

The Fed announced it would launch a new $400 billion program in a move to rebalance its $2.87 trillion portfolio—a version of the widely expected Operation Twist—by selling shorter-term notes and using those funds to purchase longer-dated Treasurys.

While stock markets were not impressed by the Fed's announcements, in the bond markets investors agreed with it.

Famous investor George Soros told CNBC that some countries should be allowed to leave the euro zone and that a double dip recession was likely. Click to watch video interview.

The risk exposure of banks in Europe has increased by 300 billion euros ($406.26 billion) because of the debt crisis and they need to recapitalize to make sure they can withstand potential losses, the International Monetary Fund said Wednesday in its Global Financial Stability report.

On the economic front, flash PMI data for September will come out for the euro zone and for Germany and France and investors will be watching to see whether the region's economy is slowing down sharply.

HSBC 's China Flash PMI figures showed factory activity contracted for the third consecutive month in September because of weaker overseas demand.

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