France, hit by the turbulences of the financial markets

• Emergency reunion between Nicolas Sarkozy and Angela Merkel

• The French stock market regulator is tracking the evolution of the shares of banks

Over the past two days, the French stock market was affected more than other European markets, due to the fears that the sovereign debt crisis could spread.

Whereas yesterday, around 16:00, the major index of the Paris market was down 1%, on the previous day it had lost almost 5.5%. The recovery of the second half of the day was caused by the announcement that French president Nicolas Sarkozy would hold an emergency meeting with German chancellor Angela Merkel.

However, the two officials have decided to meet on Tuesday, in Paris, to discuss the situation in the Eurozone and other international problems. The decision came after, on Wednesday, Nicolas Sarkozy held an emergency meeting with several minister and decided that the country needs more austerity measures.

• The AMF, watching bank stocks

The French financial market authority (AMF) yesterday announced that it was carefully watching the evolution of the shares of French banks on the Paris Stock Exchange, after they suffered large drops on August 10th, due to rumors that France could lose its top "AAA" rating.

"We will be watching the solid functioning of the markets, and in particular that of the stocks of banks, which suffered heavy drops on Wednesday", said one spokesperson of the AMF.

Shares of "Société Générale", the second largest bank in France, fell 15%, after, falling as much as 22.5% during the day, amid speculations about the bank"s "disastrous situation".

Bank officials have announced that the rumors concerning its situation are "totally unfounded". The managing director of "Société Générale", Frederic Oudea, said, quoted by CNBC, that the bank was ready to handle the capital requirements imposed by the future Basel III norms. "When nervousness exists, it is very easy to plant totally unfounded information in the market", said Oudea.

The management of "Société Générale" urged the stock market watchdog to investigate the source of the rumors which are "bringing serious harm to the shareholders" interests".

It needs mentioning that British publication Daily Mail apologized for the information published about "Société Générale" in its Sunday edition, in which it said that the bank was "on the brink of disaster". The publication admitted that the information it presented was false.

Moreover, on Wednesday rating agencies Standard & Poor"s, Moody"s Investors Service and Fitch Ratings reaffirmed the "AAA" assigned to France.

• An Asian bank has cut the credit lines to major French banks

An Asian bank has cut the credit lines to the major French banks, and five more are reviewing their financial services for commercial exchanges and swap line risks, due to worries over the exposure of French banks to the Eurozone crisis, sources quoted by Reuters say.

The Swiss franc yesterday fell almost 4.5% against the Euro and the dollar, as analysts expect that the Central Bank might introduce negative interest rates on deposits, thus forcing banks to charge their customers for holding their deposits.

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The MSCI All-Country index, which includes stocks from most countries, lost almost 4,000 billion dollars in August, which is almost equal to the combined worth of the economies of Italy, Spain, Portugal, Ireland and Greece, according to Reuters. The current value of the index is 24,840 billion dollars.

The crash was caused by the fears concerning the crisis of the Eurozone might spread to Italy and Spain, as the impact on the European banking system and the potential relapse of the world economy into recession.