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European, Asian markets rise as investors take heart from Wall Street rally
Published in Saudi Press Agency on 29 - 01 - 2008


European and most Asian stock markets
rebounded Tuesday as investors cheered an overnight rally
on Wall Street and snapped up beaten down shares on
expectations of a U.S. interest rate cut later this week, reported ap.
But growing speculation that the Federal Reserve will
lower a key rate by a quarter point, instead of the more
aggressive half-point, kept gains in check.
European shares rose in early trading and U.S. stock index
futures were mixed.
The U.K.'s FTSE 100 Index grew 1.5 percent to 5,872.50,
while Germany's DAX gained 1.1 percent to 6.893.59. The
French CAC rose 1.8 percent to 4,935.50.
«The FTSE rebounded this morning after yesterday's
losses, led by the mining sector which is adding 20 points
to the index on the back of record precious metals
prices,» said Nathan Miller, a trader at CMC Markets in
London.
In Asia, Japan's benchmark Nikkei 225 index rose 2.9
percent at 13,478.86 while Hong Kong's blue-chip Hang Seng
Index gained 1 percent to 24,291.8 after earlier rising as
much as 2.8 percent. Both markets _ Asia's two biggest _
tumbled at least 4 percent Monday on persistent fears the
U.S. economy was entering a recession.
Monday's drop gave investors a chance to re-enter the
market, said Francis Lun, a general manager at Fulbright
Securities in Hong Kong.
In China, the benchmark Shanghai Composite Index rose 0.9
percent after tumbling 7.2 percent Monday. Stocks in South
Korea, Thailand and the Philippines also rose.
But Australia's benchmark index slid 2.5 percent as
traders bet on a smaller-than-hoped-for rate cut when the
Fed's policy planners meet Tuesday and Wednesday. Last
week, the Fed slashed its key interest rate by
three-quarters of a point to 3.5 percent after a plunge in
Asian and European markets, which have since bounced back
somewhat.
The Fed was likely to cut rates a quarter point «given
the deep cut last time and that there are some signs of
stabilization in the market,» said Malcolm Wood,
Asia-Pacific equities strategist at Morgan Stanley in Hong
Kong.
That would likely disappoint Asian markets where investors
were banking on a bigger cut, and could trigger more
selloffs later in the week, he said.
Global markets have been in turmoil this month as
investors reacted to a string of bad economic news out of
the United States. Asian markets are especially sensitive
as their economies are heavily reliant on American
consumers buying their exports.
The U.S. economy has been battered by a housing slump and
credit crunch triggered by a spike in defaults on risky
mortgages that has led to billions of dollars of bad assets
at major American and European banks.
Sentiment got a lift from Wall Street's gain on Monday,
when investors in the U.S. took a dismal new home sales
report as a sign the Federal Reserve will lower interest
rates. The Dow Jones industrial average rose 176.72, or
1.45 percent, on Monday to 12,383.89, while the Standard &
Poor's 500 index rose 23.36, or 1.76 percent, to 1,353.97.
In Hong Kong, gainers included export-related stocks such
as Li & Fung, which jumped 5.7 percent. Clothing maker
Esprit Holdings was up 3.4 percent.
China coal stocks listed in Hong Kong also gained on
expectations that the prolonged and unexpectedly severe
winter across China will drive demand for more coal. China
Coal was up 1.4 percent, while China Shenhua was up 1.7
percent.
In Tokyo, steel and bank issues were among Tuesday's
gainers. Kobe Steel rose 2.3 percent and Shinsei Bank
jumped 9.4 percent.
U.S. stock index futures were mixed hours before New York
opened trading Tuesday. Dow futures were up 11 points, or
0.1 percent, at 12,388, while S&P 500 futures were up 2.4
points, or 0.2 percent, to 1,357.1. Nasdaq Composite
futures were down 6.25 points, or 0.35 percent, to 1,804.


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