European stockmarkets tumbled to six-year lows today, led by insurers such as ING as the prospect of war in Iraq drew closer after a tough-talking speech by US President George W. Bush overnight.
"Bush has confirmed in his speech that a war is going to happen and that's why the markets are down," said Mr Nigel Cobby, managing director of European Equities at JP Morgan.
"Fundamentals, relative valuations, all of the normal criteria mean nothing until it's out of the way... And to be brutally honest, as far as the market is concerned, the sooner the better," Mr Cobby said.
In London the FTSE 100 fell to a new seven and a half year low with banks stocks doing the damage. The FTSE was last down 62.5 points, or 1.8 per cent, at 3,427.5 shortly after today's open.
The FTSE Eurotop 300 index of pan-European blue chips was down 2.4 per cent at 753.74 points - its lowest level since its close on January 30th 1997.
Early indications that Wall Street would open sharply lower also weighed on sentiment.
Technology stocks were also under the cosh. Sector bellwether Nokia fell 3.3 per cent as German chipmaker Infineon fell 6.3 per cent.
In his State of the Union address earlier today, Mr Bush made his case against Iraq and said "some crucial hours may lie ahead" for US troops.
He called on the United Nations Security Council to convene on February 5th to hear Secretary of State Colin Powell present information about Iraq's suspected weapons of mass destruction. Mr Anais Faraj, global equity strategist at Nomura, said one of his main concerns about Bush's speech was that the US appeared prepared to go it alone in any war with Iraq without United Nations approval.
"The problem with a unilateral decision is that the longer-term impact would destabilise the Middle East and complicate relations with the Europeans and with China, at a time when the world economy is in a fairly fragile state," he said.
"Friction on foreign policy would immediately translate into friction on things like the dollar and trade as well. A unilateralist momentum could really undermine confidence in the whole trading system," he said.
Mr Faraj added that it appeared likely that a war in Iraq could break out in late February or early March.