Global markets enjoy a rebound

Source: Agencies  |   2008-10-15  |     NEWSPAPER EDITION

WORLD stock markets rose yesterday with a record session in Japan leading to stronger European shares and a solid open on Wall Street, as markets welcomed the United States government's plan to pump US$250 billion into banks and shore up the country's financial system.

Wall Street's early gains came in the wake of Monday's record one-day 936-point jump and the strongest ever daily performance on Japan's benchmark Nikkei 225 index, which surged 1,171.14 points, or 14.15 percent, to close at 9,447.57. Tokyo financial markets were playing catch-up because they were closed Monday for a holiday.

The Dow Jones index of leading US shares rose 183.19 points, or 2 percent.

In London, the FTSE 100 index of leading shares was up 146.94 points, or 3.5 percent, at 4,403.84 by late afternoon local time despite news that inflation in Britain is running at a 16-year high. Germany's DAX was up 167.54, or 3.3 percent, at 5,229.99 even though a group of leading German economic think tanks said yesterday that Europe's largest economy is on the "brink of a recession."

The CAC-40 in France was 151.95 points, or 4.3 percent, stronger at 3,683.45.

The resurgence in the markets follows unprecedented government efforts to bring an end to the financial crisis that has threatened the outlook for the whole global economy.

So far, government actions appear to have worked, at least in terms of boosting confidence in the financial markets.

"The sense of relief is obviously palpable, in terms of the share price gains, but minds will soon turn back to the state of the global economy," said Richard Hunter, a strategist at Hargreaves Lansdown in London.

The long-term key to whether the rescue packages work is whether the flurry of activity can actually break the logjam in credit markets, and the early indications are that there has been some easing in rates and spreads.