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European shares gain on US lead Stock market turbulence persists
(about 4 hours later)
European stock markets have recovered some ground after the heavy losses of recent days, but share prices fell in Asia for a third straight session. Stock markets around the world remain volatile after the heavy losses of recent days, with share prices falling in Asia for a third straight session.
Markets made initial gains in London, Paris and Frankfurt, taking their lead from the US, where the benchmark Dow Jones index closed up 0.4%.Markets made initial gains in London, Paris and Frankfurt, taking their lead from the US, where the benchmark Dow Jones index closed up 0.4%.
But markets remain volatile in the wake of Tuesday's global share sell-off, triggered by general economic concerns. But continuing economic concerns meant that UK, French and German markets were all in negative territory by lunchtime.
The Shanghai market fell 2.9% while the key Nikkei index fell 0.8% in Japan.The Shanghai market fell 2.9% while the key Nikkei index fell 0.8% in Japan.
The global stock slide was fuelled by speculation that China's government would try to clamp down on illegal share trading and might impose a capital gains tax on stock market earnings. The global stock slide was fuelled by speculation that China's government would try to clamp down on illegal share trading and may impose a capital gains tax on stock market earnings.
Shares fell 9% in Shanghai on Tuesday, their biggest daily reverse in 10 years, and dropped a further 87.99 points on Thursday.Shares fell 9% in Shanghai on Tuesday, their biggest daily reverse in 10 years, and dropped a further 87.99 points on Thursday.
US developmentsUS developments
Investors have also been unnerved by signs of a sharp slowdown in the US economy, whose health is crucial to the future direction of global economic growth.Investors have also been unnerved by signs of a sharp slowdown in the US economy, whose health is crucial to the future direction of global economic growth.
Investors are still wondering if the storm is actually over or not Masatoshi Sato, Mizuho Investors Securities Send us your experiences Q&A: World stocks slumpInvestors are still wondering if the storm is actually over or not Masatoshi Sato, Mizuho Investors Securities Send us your experiences Q&A: World stocks slump
Analysts are waiting for a raft of economic figures which will be released in the US later on Thursday, including data on consumer spending.Analysts are waiting for a raft of economic figures which will be released in the US later on Thursday, including data on consumer spending.
"The biggest risk in the next few weeks is likely to come from the US data front and developments in the mortgage and housing markets," said analysts at JP Morgan Chase."The biggest risk in the next few weeks is likely to come from the US data front and developments in the mortgage and housing markets," said analysts at JP Morgan Chase.
On Wednesday, figures from the US Commerce Department showed that the US economy grew at a slower-than-expected pace of 2.2% in the last three months of 2006.On Wednesday, figures from the US Commerce Department showed that the US economy grew at a slower-than-expected pace of 2.2% in the last three months of 2006.
Other figures showed that spending on new home building fell 19.1% during the quarter, the sharpest drop since early 1991, adding to worries over the state of the housing market in the world's largest economy.Other figures showed that spending on new home building fell 19.1% during the quarter, the sharpest drop since early 1991, adding to worries over the state of the housing market in the world's largest economy.
Japanese shares continue to fallJapanese shares continue to fall
However, US Federal Reserve chairman Ben Bernanke sought to reassure the market on Wednesday that the global slide was not a sign of deeper concerns, following remarks by his predecessor Alan Greenspan about the possibility of a recession.However, US Federal Reserve chairman Ben Bernanke sought to reassure the market on Wednesday that the global slide was not a sign of deeper concerns, following remarks by his predecessor Alan Greenspan about the possibility of a recession.
The Dow Jones Industrial Average, which closed down 416 points - or 3.3% - on Tuesday, clawed back 52.39 points, or 0.43%, to end the day at 12,268.63.The Dow Jones Industrial Average, which closed down 416 points - or 3.3% - on Tuesday, clawed back 52.39 points, or 0.43%, to end the day at 12,268.63.
In response, the FTSE 100 index rose 26.8 points to 6198.3 in early trading in London, while key share indices in France and Germany also headed upwards. In response, the FTSE 100 index in London made early gains but by lunchtime it was down 35.5 points at 6,136.
'Aftershocks''Aftershocks'
Henk Potts, from Barclays Wealth, said trading in London had been "calmer" than in the past two days but that concerns about the Chinese economy were still worrying investors.
"The Chinese economy has become an integral part of the global economy and we have really been feeling the effects in London," he said.
Prior to the recent market turbulence, stock prices had reached record levels in a number of key world markets, prompting some analysts to fear they may have gone too high, too fast.Prior to the recent market turbulence, stock prices had reached record levels in a number of key world markets, prompting some analysts to fear they may have gone too high, too fast.
The question facing many investors is how far and how long the fall in prices will last, and whether or not the bull run that has driven stocks and indexes higher has now broken.The question facing many investors is how far and how long the fall in prices will last, and whether or not the bull run that has driven stocks and indexes higher has now broken.
"Investors are still wondering if the storm is actually over or not," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities."Investors are still wondering if the storm is actually over or not," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities.
"Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March," he added."Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March," he added.