By Jamie McGeever and John Geddie
LONDON (Reuters) - A two-hour outage at news and market data provider Bloomberg LP hit financial markets around the world on Friday, prompting debt sales to be postponed and exacerbating a spike in volatility in European stocks.
"We experienced a combination of hardware and software failures in the network, which caused an excessive volume of network traffic," Bloomberg said in a statement.
"This led to customer disconnections as a result of the machines being overwhelmed."
Bloomberg said service has been fully restored and the company is reviewing why its "multiple redundant systems" failed to prevent the disruption.
The lack of price visibility was blamed for accelerating a sell-off in European shares, while trading volumes in German government bond futures contracts fell by around a third.
There was little disruption to U.S. trading, according to market sources.
Bloomberg, which competes with Thomson Reuters Corp (N:TRI) (TO:TRI), provides real-time news and financial information to more than 320,000 subscribers globally and allows users to trade across asset classes.
Social media first reported the Bloomberg systems going down at around 0720 GMT and the screens were blank for most of the following two hours, market participants said, adding that prices were unavailable and the news feed intermittent.
Traders said the length of time the Bloomberg screens were down was unprecedented.
"There were frantic scenes on the markets this morning," said Connor Campbell, a financial analyst at spread betting firm Spreadex.
UNPRECEDENTED
Britain's Debt Management Office had planned a regular sale of 3 billion pounds of treasury bills on Friday morning. The tender was held later in the day. A spokesman said he could not recall the agency ever having to postpone a sale in similar circumstances.
The Bank of England said its core operations were not affected and that it had "all the tools it needs to carry out its responsibilities for financial stability, and provision of market liquidity, if and as required."
In a statement, Britain's financial market regulator, The Financial Conduct Authority, said: "We are aware of the issue and are monitoring the impact on our firms."
The volume of trading in German Bund futures between 0700 and 0900 GMT was down by around a third compared with the same period in the last few Friday trading sessions.
In that two-hour period, 62,845 lots of Bund futures were traded, according to Eurex data. That compares with 96,301 contracts a week ago, 89,048 on March 27 and 88,476 on March 20.
"It has created a lot of disruption, because there's lack of visibility," ADM Investor Services strategist Marc Ostwald said.
"While Friday is not generally a huge day for corporate issuance, everything's been put on hold because of it."
Bankers told Thomson Reuters market news service IFR that at least one corporate bond sale worth over 1 billion euros had been delayed because of the outage.
Traders said the outage had exacerbated volatile activity on stock markets, particularly around the expiration of options contracts. It also hindered the ability of traders to react to an announcement on new Chinese regulations.
"A lot of people use Bloomberg EMSX to route orders out, so there might have been loads of people wanting to react to the news but couldn't as they couldn't put their sales into the market," said Mark Ward, head of trading at Sanlam.
At 1635 GMT the leading index of Europe's top 300 shares was down 1.76 percent (FTEU3).