People are worried that they can't quantify the asbestos issue and it won't go away

Joshua Zaret ABN Amro

"This appears to be a political decision to save asbestos companies and insurers money while victims die in poverty and pain," the GMB union's director of health, Nigel Bryson, said following the court's ruling.

The brief burst of comfort for companies in the compensation firing line comes just four days after a US oil giant was ordered to pay $30m in damages to victims.

The result: Shares in a range of industrial companies - from engineering to shipbuilders, packaging to media groups - have tumbled on the renewed asbestos fears.

The falls have spurred financial analysts to scan their annual reports in search for signs of further asbestos risks.

But rather than searching for human health hazards, they search for companies' financial health risks.

Their concerns are legal liabilities to workers and customers who have suffered from asbestos exposure.

See you in court

Nothing frightens investors more than legal risk; it is unpredictable, unquantifiable and usually very costly.

Asbestos dust: A serious threat to both human and financial health

And like asbestos itself, legal problems once unearthed are notoriously difficult to get rid of, and any attempt to cover them up is doomed to fail. Worse still, worries about liability exposure tend to spread like wild-fire.

"People are worried that they can't quantify the asbestos issue and it won't go away," said ABN Amro's managing director of paper and forest products research, Joshua Zaret.

Scared investors

The asbestos fever was triggered by a court ruling on 7 December which ordered US oil services company Halliburton to pay $30m in damages related to asbestos exposure.

We learnt our lesson... We no longer have any asbestos liabilities

Lloyd's of London spokesman

Halliburton's shares instantly dived 42%, though it bounced back on Monday, regaining just less than half Friday's losses.

Nevertheless, the liability concerns spread to the Swiss-Swedish engineering giant ABB, and to the maker of Jiffy bags and Bubble Wrap, Sealed Air, as well as to the media giant Viacom and the forest products company Georgia-Pacific.

All these firms saw up to 10% of their stock market value vanish.

"[Investors] are worried about owning stocks with exposure to asbestos," said Mr Zaret. "They see a long line of dead bodies and they're scared.

Questions answered

The knee-jerk reactions by stock market investors selling shares in companies that might - just might - be hit by asbestos-linked injury claims have been followed with investigations into several firms at risk.

Even if they win five different lawsuits, nobody will pay much attention. But if they lose one, everybody will sit up and take notice.

Arvind Sanger Deutsche Bank Alex Brown

Analysts and journalists across the world started asking questions, and companies were forced to answer.

The Anglo-Norwegian ship builder and engineering firm Kvaerner admitted to journalists that the firm is indeed dealing with 800 claims from workers who say they have suffered asbestos exposure.

Clearly reluctant to admit any liability, a Kvaerner spokeswoman stressed that so far the company has only had legal expenses linked to the claims, the Oslo newspaper Finansavisen reported.

Similarly, the Austrian fireproof materials maker RHI insisted that talk of hundreds of thousands of potential asbestos claims against two of its US subsidiaries posed no threat to the group as a whole.

Legal experts have told RHI that the parent company is not liable for injury compensation claims, chief executive Andreas Meier told the news agency Reuters.

Unchanged risks

ABB insisted that it has "not fundamentally changed our assessment of the asbestos situation in the US", even though analysts from Schroder Salomon Smith Barney, Societe Generale, Credit Suisse First Boston and Zuericher Kantonalbank all said further provisions may be needed.

Halliburton's insistence that the asbestos claims would not have a significant financial impact on the company failed to mollify analysts.

"I feel sympathy for [the] management and I wish them luck," said Banc of America's Jim Wicklund.

"The problem is, in spite of everything they said... there is still a great deal of uncertainty about the ultimate magnitude of their liability."

Deutsche Bank Alex Brown analyst Arvind Sanger agreed. "Even if they win five different lawsuits, nobody will pay much attention," he said. "But if they lose one, everybody will sit up and take notice."

The credit rating agency Standard & Poor's slashed Halliburton's debt rating on Tuesday due to its asbestos risk.

And Viacom, which is being sued by almost 130,000 people in asbestos related claims against its industrial subsidiaries, simply said it has "meritorious defences" to asbestos matters, and if that is not good enough, its reserves and insurance should cover any liabilities.

Lloyd's is safe

But that merely shifts the attention of analysts onto the insurance industry which has already taken a beating following asbestos claims.

Several thousand underwriters of the Lloyd's of London insurance market suffered personal bankruptcy following a flood of asbestos claims during the early 1990s.

Lloyd's lost �4bn from asbestos and in 1993 the market almost collapsed as a consequence, a spokesman told BBC News Online.

"We learnt our lesson," he said. "We no longer have any asbestos liabilities."

All of Lloyd's asbestos insurance policies were transferred to the special re-insurance vehicle Equitas which was equipped with a �15bn money bag to deal with all Lloyd's policies taken out before 1992.