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Unsettled world markets hit by more turbulence
By Ben Perry
AFP
LONDON
Petroleumworld.com 08 16 07
Volatile trading continued on world stock exchanges on Wednesday, with no end in sight to the turmoil that has gripped financial markets for much of the past week.
European markets closed mixed, with losses in London and Paris, while US markets opened lower before turning round in late morning trading to post gains.
Asian stocks plunged early in the day, with Tokyo and Hong Kong both down 2.0 percent and the Indonesian market off 6.5 percent.
Analysts said swings in sentiment were being caused by nervousness as investors attempt to weigh up the impact of a downturn in the US housing market and the exposure of banks to bad loans.
" Market volatility is going to continue until the extent of the problem is properly known," said Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers in London.
Traders remain highly sensitive to evidence that losses from US subprime home loans -- high-risk loans to people with poor credit histories -- may have hit banks or investment funds around the world.
" There are suspicions surrounding all the banks," said one Paris-based dealer, commenting on broad losses for most banking stocks in Europe.
Around midday in the US, the Dow Jones Industrial Average was down 0.10 percent at 13,015.51 while the tech-heavy Nasdaq composite added 0.14 percent to 2,502.52.The broad-market Standard & Poor's 500 index gained 0.20 percent at 1,429.36.
Shortly after the market opened, the blue-chip DJIA index slid below the psychologically important barrier of 13,000 points. Almost a month ago the Dow had topped 14,000 points for the first time, on July 19.
In Europe, the London FTSE 100 index closed down 0.56 percent at 6,109.30 points and in Paris the CAC 40 fell 0.66 percent to 5,442.72 points.
The FTSE has seen stormy trading in recent days. Last week it shed 2.99 percent in value -- but rebounded by the same percentage on Monday.
In Frankfurt on Wednesday, the DAX index rose 0.28 percent to close at 7,445,90 points.
" Investors are still having a real battle trying to understand who's got the (subprime) exposure and what their liabilities are," said Barclays Capital analyst Henk Potts.
" Until we get a better picture on how the problems we've been seeing in the credits markets will affect long-term business, there's going to be this uncertainty."
In Asia, Tokyo's Nikkei-225 index slumped 2.19 percent to an eight-month low, Jakarta was punished most with a 6.4 percent tumble, Hong Kong was down 2.87 percent and Singapore lost 3.45 percent.
The latest wave of selling in Asia came as the Bank of Japan decided Wednesday to siphon off a further 2.0 trillion yen (17.0 billion dollars) in excess funds from the banking system, believing that fears of a domestic credit squeeze have faded.
It came a day after the central bank had drained 1.6 trillion yen from the money market, the amount it had injected since Friday, as part of concerted global efforts to ward off a potential credit crunch.
The world's major central banks have been pumping billions of dollars of emergency funds into the banking system in an effort to restore calm to global markets. But some analysts have said it has had the opposite effect.
Many investors remain concerned that US mortgage defaults by subprime homeowners will spark tighter global borrowing conditions, thereby weakening consumer spending, corporate activity and world economic growth.
AFP 15 1658 GMT 08 07
Copyright© 2007 AFP. All rights reserved.
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