FTSE volatile amid finance fears
Tuesday, 22 Jan 2008 11:24
Britain's FTSE 100 index rallies amid global recession fears
Britain's FTSE 100 index has rallied after fears about a global economic downturn prompted early losses.
Having seen its worst single-day performance since September 11th 2001 yesterday with a 5.5 per cent drop, the London exchange dropped by 4.5 per cent to below 5,350 points on opening.
But during a volatile morning of trading in London the situation had brightened by 11:00 GMT, with the exchange up about three per cent to over 5,600 points.
London's early poor performance followed heavy losses by
Asian stock markets, in repeats of yesterday's slips.
US bourses were shut yesterday because of a public holiday but are set to open later today. Analysts fear they may echo other global markets' strong negative reaction to US president George Bush's economic stimulus package.
Mr Bush pledged measures worth around $145 billion (£74 billion) on Friday, admitting Americans were "concerned about their economic future".
But most Asian and
European exchanges saw losses of at least five per cent on Monday as commentators said the White House's proposals had not met expectations.
The French Cac 40 and German Dax indices fell by around seven per cent yesterday, although both followed the UK's volatile trading pattern during the morning.
And this morning Asian bourses repeated the sell-off. Bombay's exchange opened down 9.75 per cent, triggering a one-hour suspension, before recovering to around seven per cent down.
Hong Kong's Hang Seng index slipped eight per cent, while the Japanese Nikkei index closed down 5.65 per cent.
Despite the dive the Bank of Japan voted to keep
interest rates at 0.5 per cent, arguing the problems stemmed from the US economy rather than its own monetary situation.
The collapse of the US subprime mortgage market has resulted in tightened lending conditions around the world and fostered fears of an American recession.
Concern intensified after Dominique Strauss-Kahn, managing director of the International Monetary Fund, warned financial markets were waking up to the prospect of a possible recession in the US.
Speaking on BBC2's Newsnight programme last night, he said: "All the world's countries are suffering from the slowdown in the United States, in any case all developed countries.
"Frankly everybody has become aware of the fact that the situation is a situation which is serious."