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Stocks falter as fears persist US stocks slide to five-year low
(about 1 hour later)
Stock markets have lost ground, erasing earlier gains as nervous investors remained concerned that the financial crisis would lead to a world recession. Stock markets have fallen again, erasing initial gains as edgy investors remained concerned that the financial crisis would lead to a world recession.
On Wall Street, the Dow Jones was down 3.2%, - sinking below 9000 points for the first time since August 2003. On Wall Street, the Dow Jones ended down 7.3% - tumbling below 9000 points for the first time since August 2003.
European shares followed their US counterparts lower, with the FTSE 100 ending down 1.2% and France's Cac 40 down 1.55% by the close of trade. European shares started the day in positive territory but finished lower with the FTSE 100 down 1.2% and France's Cac 40 down 1.55%.
Investors had earlier taken some comfort from Wednesday's rate cuts.Investors had earlier taken some comfort from Wednesday's rate cuts.
A year ago exactly, the Dow closed at a record high above 14,000 points but on Wednesday it closed 678.91 lower at 8,579.19 - its seventh straight day of losses.
"A lot of people believe the bottom has been reached but that doesn't mean volatility hasn't gone away," said Howard Wheeldon, senior strategist at BGC Partners."A lot of people believe the bottom has been reached but that doesn't mean volatility hasn't gone away," said Howard Wheeldon, senior strategist at BGC Partners.
"The underlying fear is how much hell we have in terms of recession," he added. We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point Richard HunterHargreaves Lansdown stockbrokers Check UK bank shares"The underlying fear is how much hell we have in terms of recession," he added. We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point Richard HunterHargreaves Lansdown stockbrokers Check UK bank shares
More guaranteesMore guarantees
As the turbulent week continued, in other developments:
  • US Treasury Secretary Henry Paulson is considering capital injections into troubled US banks, a White House spokeswoman said.
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  • The oil producers cartel OPEC will hold an emergency meeting in Vienna on November 18 to discuss the impact of the financial crisis on oil prices, which fell below $87 a barrel.
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  • The IMF head said the world economy was on the "cusp of a recession". Dominique Strauss-Kahn called on countries to work in joint action and forecast that a slow recovery would begin in the second half of 2009.
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  • The British Bankers' Association said the interbank cost of borrowing overnight had fallen - a day after interest rate cuts and governments provided additional liquidity. However, longer-term lending rates rose to their highest this year.
  • Iceland suspended trading on its OMX Nordic Exchange until Monday, citing "unusual market conditions". Earlier, its largest bank, Kaupthing, became the third financial institution to be taken over by the country's government in the past week.
  • Ireland extended its guarantee of bank deposits to cover savings in Irish branches of five foreign-owned institutions Northern Ireland's Ulster Bank, British-owned First Active and HBOS, Belgium's IIB Bank and German-owned Postbank.
  • Gordon Brown wrote to G7 and EU leaders suggesting that the UK government's bank rescue plan could be a template for other nations to help unfreeze credit markets.
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  • Dexia shares jumped 25% after France, Belgium and Luxembourg announced they would provide state guarantees for its borrowings.
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  • UK Chancellor Alistair Darling flew to the US to discuss the co-ordinated cutting of interest rates by six central banks.
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  • After trading on Russian stock markets had been suspended following sharp share falls earlier this week, they were again halted - this time after stocks climbed too high after trade resumed.
 As the turbulent week continued, in other developments:
  • US Treasury Secretary Henry Paulson is considering capital injections into troubled US banks, a White House spokeswoman said.
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  • The oil producers cartel OPEC will hold an emergency meeting in Vienna on November 18 to discuss the impact of the financial crisis on oil prices, which fell below $87 a barrel.
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  • The International Monetary Fund (IMF) has activated an emergency finance mechanism to help countries hit by the financial crisis.
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  • The British Bankers' Association said the interbank cost of borrowing overnight had fallen - a day after interest rate cuts and governments provided additional liquidity. However, longer-term lending rates rose to their highest this year.
  • The UK has condemned Iceland's handling of the collapse of its banks and its failure to guarantee British savers' deposits
'False dawns''False dawns'
Seven central banks on Wednesday cut interest rates in an effort to steady the faltering global economy.Seven central banks on Wednesday cut interest rates in an effort to steady the faltering global economy.
It came after the UK government's announcement of a package of measures aimed at rescuing the banking system.It came after the UK government's announcement of a package of measures aimed at rescuing the banking system.
This package makes available £400bn ($692bn) of fresh money.This package makes available £400bn ($692bn) of fresh money.
There was "an air of cautious optimism" that such measures would have some impact on the financial crisis, said Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers. FTSE 100 INDEX: 9 October 2008*All Times GMTThere was "an air of cautious optimism" that such measures would have some impact on the financial crisis, said Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers. FTSE 100 INDEX: 9 October 2008*All Times GMT
"Banking shares have been the main beneficiaries of the UK's rescue plan, and the interest rate cuts," he added."Banking shares have been the main beneficiaries of the UK's rescue plan, and the interest rate cuts," he added.
"We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point.""We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point."
Asian stock markets rose, though Japanese shares closed lower.Asian stock markets rose, though Japanese shares closed lower.