French bank freezes funds, subprime may spread to Europe

Concerns that U.S. subprime problems might spread to Europe caused suspended fund redemptions. When the French asre singing the U.S. mortgage blues the problem does not appear to be contained, as was stated in earlier by some. Here is the report — NEW YORK, Aug 9 (Reuters) – A safety bid drove U.S. government securities prices sharply higher on Thursday when French bank BNP Paribas suspended redemptions in three funds and the European Central Bank was forced to inject extra funds into the system in a quick overnight tender. France’s biggest listed bank, BNP Paribas, said it froze 1.6 billion euros ($1.17 billion) in three of its funds, citing U.S. subprime mortgage sector problems.

“BNP’s freezing of the three funds that have asset-backed securities has sent stocks and global rates down around the world,” said John Spinello, senior vice president and chief fixed-income technical strategist at Jefferies and Co. “It’s all the concern again about the subprime credit situation spreading to Europe.”