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Markets mixed in volatile trade Markets mixed in volatile trade
(about 3 hours later)
World stock markets have been volatile in Tuesday trading as investors continued to worry over the strength of financial institutions.World stock markets have been volatile in Tuesday trading as investors continued to worry over the strength of financial institutions.
London's FTSE 100 index rallied despite banking shares taking a hammering - HBOS and Royal Bank of Scotland both losing more than 30%. London's FTSE 100 index rallied despite banking shares taking a hammering.
Having shed 7.8% on Monday, the key London index closed up 0.35%. France's Cac 40 index ended 0.55% higher. However, on Wall Street stocks fell again as Federal Reserve Chairman Ben Bernanke said the economic outlook looked set to deteriorate further.
In choppy morning trading on Wall Street, the Dow Jones was down 1%. The Dow Jones was down 244 points, or 2.5% in afternoon trade in New York after starting the day higher.
The other main US index, the Nasdaq, was 1.5% lower.The other main US index, the Nasdaq, was 1.5% lower.
Earlier, Asian markets had been mixed as traders reacted to the turmoil. Mixed performance
Japan's Nikkei 225 index sank more than 5% - below the 10,000-point barrier - before recovering slightly to close down 3%. Having shed 7.8% on Monday, the key London index closed up 0.35% despite HBOS and Royal Bank of Scotland both losing more than 30%.
France's Cac 40 index, which lost 9% the previous session, ended 0.55% higher.
The Federal Reserve will need to consider whether the current stance of policy remains appropriatequote here Ben Bernanke, Fed chairman
Earlier, Japan's Nikkei 225 index sank more than 5% before recovering slightly to close down 3%.
However, Australia's financial markets rallied after the country's central bank cut its official interest rate from 7% to 6%.However, Australia's financial markets rallied after the country's central bank cut its official interest rate from 7% to 6%.
'Recession arrived' 'Momentous'
A shortage of capital is a big issue for banks...but the really big issue is the breakdown of wholesale markets Robert PestonBBC business editor class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/banks_most_pressing_problem.html">Read Robert's blog in full Fed chairman Mr Bernanke said that the US was tackling a financial crisis "of historic dimensions" and signalled that the central bank may be prepared to cut interest rates to support the economy.
The market moves came amid developments including: He said the outlook for inflation had improved as oil and other commodity prices had fallen.
In a volatile day in London, the FTSE 100 index closed 16 points higher at 4,605.22 in late afternoon trading. "In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate," Bernanke said.
Its 391-point drop on Monday had already wiped £93bn from the value of London's leading shares. The market moves came amid developments including:
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  • US President George W Bush has called for co-ordinated action by leading industrialised countries to tackle the worldwide credit crunch.
  • The UK government is poised to announce details of a comprehensive rescue package for the banking system.
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  • Spain, Belgium and the Netherlands have significantly increased the amount of savers' deposits they will protect.
France's Cac 40 index, which lost more than 9% in the previous session, surrendered some of its early gains, but closed 20.24 points ahead at 3,732.22, while Germany's Dax index fell 1.12% to 5,326.63 points.
On Wall Street, the Dow Jones index, which had lost 370 points on Monday, shed a further 108 points to 9,846.
Earlier, Japan's Nikkei index lost 317.2 points to end at 10,155, while Hong Kong's Hang Seng index finished 5% lower.
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