Societe Generale Shares Plummet More Than 21% on Rumors

Shares in French bank Societe Generale fell more than 21 percent on a whirlwind of market rumours, before a spokeswoman categorically denied all rumours relating to the bank's financial solidity.

"SocGen categorically denies all the market rumours," the bank spokeswoman told Reuters. Other French banks also fell sharply, with BNP Paribas down more than 13 percent and Credit Agricole off more than 14 percent on persistent rumours about a downgrade of France's sovereign AAA rating.

The three major ratings agencies have all confirmed today and yesterday that their French sovereign rating outlook is stable.

"The rumours on the French triple-A rating are having a catastrophic impact, even despite the denial from credit agencies. Shorts are on a rampage; it's a calamity. This has nothing to do with fundamentals," said Christian Jimenez, fund manager and president of Diamant Bleu Gestion, in Paris.

Societe Generale on its website mentioned an apology by the Mail on Sunday for a story that said the bank was in a "perilous" state and possibly on the "brink of disaster".

"We now accept that this was not true, and we unreservedly apologise to Societe Generale for any embarrassment caused," the newspaper said.

Earlier on Wednesday, French President Nicolas Sarkozy summoned an emergency meeting with key government ministers and the head of the French central bank for what his office described as a "working meeting on the economic and financial situation".

Some investors later speculated that Societe Generale officials were present at the meeting, but an official at the Elysee presidential office denied that the bank had been involved.

French banks' credit default swaps were sharply wider, with BNP Paribas' 5-year CDS widening 19 basis points to 231, Societe Generale's 5-year CDS 9.5 basis points wider at 284, and Credit Agricole's 9.5 basis points wider at 251.5.