|Page (1) of 1 - 08/11/11||email article||print page|
A rise on Wall Street helps European stock markets recover from earlier lows
BRUSSELS (AP) ' Gains on Wall Street pulled European stocks out of their earlier losses Thursday as investors were cheered by fewer people filing for unemployment in the U.S.
However, wild swings on a daily basis and across time zones highlight how febrile markets are at the moment amid concerns over the global economy and the levels of debt in both the U.S. and Europe.
The FTSE 100 index of leading British shares rose 0.6 percent to 5,039 points, while Germany's DAX increased 2.2 percent to 5,735.
Even France's CAC-40 was trading up 1 percent at 3,034 after falling deep into the red earlier in the day.
On Wall Street, the Dow Jones Industrial Average increased 2 percent to 1,0931, while the broader S&P 500 gained 2.2 percent to 1,145. They also staged a sharp turnaround as futures earlier in the day had pointed sharply downward.
In currency markets, the Swiss franc dropped sharply after a senior Swiss National Bank official said the bank is examining further measures to soften the currency's "massive overvaluation" against the U.S. dollar and the euro.
The franc fell 5.3 percent to 92 euro cents and dropped 4.9 percent to $1.31. The increased uncertainty in financial markets had pushed the franc to record highs in recent days as investors were fleeing to safe assets.
Shares rose after new data showed that the number of people filing for unemployment benefits in the U.S. fell below 400,000 last week for the first time in four months. That was seen as a sign that the job market may slowly be improving.
Thursday's share gains came after Wednesday's hammering of stocks in Europe and the U.S. Any investor cheer to the news that the U.S. Federal Reserve was keeping its super-low interest rates until the middle of 2013 dissipated as they interpreted that stance to mean that the U.S. economy will not improve substantially by 2013.
Though stock markets have been swinging wildly, there's been a measure of calm in the bond markets of Spain and Italy in the wake of the European Central Bank's purchase of their bonds.
The yield, or interest rate, on Spanish and Italian 10-year bonds remained relatively stable at around 5 percent. That rate is considered manageable for now and is over a percentage point lower than where they were trading a week ago.
However, analysts think that they will have to get even lower to really dampen worries that Europe's debt crisis will ensnare the eurozone's third and fourth largest economies.
"The reality is they will need to buy an awful lot more to get them down to sustainable levels well below 5 percent," warned Michael Hewson, market analyst at CMC Markets.
Earlier, Asian markets were under pressure following Wednesday's big reverse on Wall Street.
Hong Kong's Hang Seng index fell 1 percent to 19,595.10, but China's main index in Shanghai rose 1.3 percent to 2,703.90.
Japan's Nikkei 225 index slipped 0.6 percent to close at 8,981.94 as a strengthening yen clobbered Japan's crucial export sector. Honda Motor Corp. and Nissan Motor Corp. each lost 3.5 percent.
By late afternoon London time, the dollar was stable at 76.8 yen, while the euro rose 0.7 percent to $1.423, thanks to a somewhat higher risk appetite.
In the oil markets, prices stabilized alongside equities. The crude rose 14 cents to $83.02 a barrel.
Pamela Sampson in Bangkok contributed to this story.