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mpc: 6 Equity prices had fallen sharply towards the end of the month, with the FTSE All-Share, Euro Stoxx and S&P 500 all declining by around 4-6%. The falls in equity prices had been broadly based. In the case of the FTSE, the late-July falls had unwound all of the gains recorded since the beginning of the year. Given that risk-free interest rates had fallen, that suggested that the decline in equity prices might be ascribed to either heightened perceptions of risk, a removal of the takeover premium or downward revisions to expected earnings. However, there was, as yet, little evidence of a fall in expected earnings.