Hurricane Katrina, currently pummelling the US, is sending shock waves over to Europe too. On Monday, the storm caused oil prices to surge to record highs. Stock exchanges stumbled and insurers buckled as anxiety grew.
Katrina is estimated to be the most expensive hurricane to hit the US
Katrina pounded vulnerable, low-lying New Orleans with howling winds on Monday, damaging the roof of the Superdome stadium where thousands of poor and homeless residents had sought refuge. The storm knocked out power, flooded streets and threatened to spread destruction along a wide swathe of the US Gulf Coast.
People seek shelter in a doorway in the French Quarter of New Orleans
The large and extremely dangerous hurricane has claimed the lives of at least ten people so far and sent crude oil prices soaring following the evacuation of offshore rigs in the oil-rich Gulf of Mexico and the closure of refineries in Louisiana.
Packing winds of 240 kilometers (150 miles) per hour, the storm made landfall on a Louisiana barrier island early Monday before losing strength as it hit the mainland east of New Orleans, sparing the city a direct hit.
Three elderly people died, apparently from dehydration, as they were being evacuated from a nursing home in New Orleans on Sunday, police said. Katrina claimed seven lives as it slammed Florida last week.
US President George W. Bush declared a state of emergency that clears the way for federal aid to affected areas. "We cannot stress enough the dangers this hurricane poses to Gulf Coast communities," Bush said from his Texas ranch on Sunday.
The Bush administration said it was ready to tap into its strategic oil reserves to keep supplies flowing. Up to 40 percent of crude production along a wide swathe of the US coast from Texas in the west to Florida in the east was said by experts to be affected.
"We probably deal with almost a third of the nation's domestic oil that is produced, and that will most likely be shut down," New Orleans Mayor Ray Nagin told CNN. "That could have a significant impact on oil prices going forward," he said.
Even as experts were estimating that hurricane Katrina may be the most expensive ever to hit the United States, European stock exchanges and insurers in capitals as far away as Frankfurt and Paris were counting their losses Monday as the hurricane spent its fury.
Battered by surging oil prices, European stock exchanges faltered in early trading Monday, with the CAC 40 in Paris opening lower for the sixth straight day. The CAC was down 0.33 percent at 4,328.53 in early deals while in Frankfurt the DAX fell 0.42 percent to 4,763.61. The London exchange was closed for a bank holiday.
"It's all about oil today," a Brussels trader told AFP.
Oil prices shot up to fresh records after breaking through the 70-dollar-per-barrel threshold in Asian trading Monday.
With the psychological barrier now breached, some analysts said prices could aim for the once unthinkable $80 a barrel -- a level economists fear could severely dent consumer demand and curb business activities.
German Economy Minister Wolfgang Clement reiterated concern Monday about the negative economic effects of the latest surge in oil prices. Germany has been battling record high gasoline prices in recent weeks.
"I view with great concern the rise in crude oil prices," Clement said in Berlin. At the weekend, Clement had said in a newspaper interview that "the strong rise in oil and energy prices... endangers growth, which was just getting back on track."
In an interview broadcast Monday on the television news channel n-tv, the minister described the latest rise in oil prices as "completely exaggerated and way above the market situation."
It was not demand that was driving the price of oil, Clement insisted. "A lot of this is speculation. There's a lot of uncertainty. We must do everything to restore some calm and that means, above all, transparency."
Germany would do what it could at a European level, Clement continued. "But it's a global problem, a global market problem. The G8 (Group of Eight), the big countries must work together with the oil-producing countries to calm the markets," he said.
In addition to shares in companies such as France's engineering giant Alstom and Germany's Lufthansa flagship carrier tumbling on Monday, insurers were among the worst hit on fears of huge claims from the hurricane damage. Swiss Re was down around 1.6 percent and Germany's Allianz down 1.4 percent.