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European stock markets stabilise European stock markets stabilise
(20 minutes later)
European markets have rallied in early morning trading as investors hope for calm following Monday's heavy falls.European markets have rallied in early morning trading as investors hope for calm following Monday's heavy falls.
The UK's FTSE 100 and France's Cac 40 indexes rose 1.2%, while Germany's Dax index climbed 0.5%.The UK's FTSE 100 and France's Cac 40 indexes rose 1.2%, while Germany's Dax index climbed 0.5%.
Earlier on Tuesday, Japanese stocks traded close to 26-year lows as investor concerns about the health of the financial system persisted.Earlier on Tuesday, Japanese stocks traded close to 26-year lows as investor concerns about the health of the financial system persisted.
The Nikkei 225 touched 7,088.47 before recovering to 7229.7, down 0.69% on the day. Hong Kong's Hang Seng fell 1.9%The Nikkei 225 touched 7,088.47 before recovering to 7229.7, down 0.69% on the day. Hong Kong's Hang Seng fell 1.9%
On Monday, the US Dow Jones share index fell below 7,000 points for the first time since 1997.On Monday, the US Dow Jones share index fell below 7,000 points for the first time since 1997.
Rebound?Rebound?
After yesterday's massive sell-off, the day does look likely to begin with a modest rebound Matt Buckland, CMC Markets But analysts see Tuesday's rebound as little more than a brief respite from the doom and gloom that has sent markets spiralling downwards in recent months.
Japanese analysts said talk in Tokyo of a fresh government stimulus plan was unlikely to help revive the stock market. There's going to be more pain before there's a turnaround Lucinda Chan, Macquarie Private Wealth
"Unless markets overseas stop falling there's nothing we can do, no matter how hard we try," said Yutaka Miura, an analyst at Shinko Securities. "Whether this [rebound] will prove to be sustainable remains to be seen," said Matt Buckland at CMC Markets.
However, after Monday's steep falls, some analysts were expecting European markets to claw back some ground. Justin Urquart Stewart at Seven Investment Management was less equivocal: "It's just a relief rally after yesterday."
"After yesterday's massive sell-off the day does look likely to begin with a modest rebound, but whether this will prove to be sustainable remains to be seen," said Matt Buckland, a dealer at CMC Markets. "There's just a lot of fear driving the markets right now," said Lucinda Chan at Macquarie Private Wealth.
"The market is consumed by the global sell-down at the moment, and I think there's going to be more pain before there's a turnaround."
In Japan, analysts said talk of a fresh government stimulus plan was unlikely to help revive the stock market.
"Unless markets overseas stop falling, there's nothing we can do, no matter how hard we try," said Yutaka Miura, an analyst at Shinko Securities.
Record loss
On Monday, confidence was hit by a fresh $30bn bail-out of US insurance giant AIG following a record $62bn loss, and by the announcement from UK bank HSBC that it planned to raise £12.5bn from shareholders.On Monday, confidence was hit by a fresh $30bn bail-out of US insurance giant AIG following a record $62bn loss, and by the announcement from UK bank HSBC that it planned to raise £12.5bn from shareholders.
On Wall Street, the Dow Jones fell by 4.2% to end at 6,763, the lowest closing level since April 1997.On Wall Street, the Dow Jones fell by 4.2% to end at 6,763, the lowest closing level since April 1997.
The broader Standard & Poor's 500 index was down 4.7% at 701, briefly falling below the 700 level for the first time since October 1996.The broader Standard & Poor's 500 index was down 4.7% at 701, briefly falling below the 700 level for the first time since October 1996.
The UK's FTSE 100 index closed at a six-year low.The UK's FTSE 100 index closed at a six-year low.