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European stocks show modest falls Global stocks show mixed trading
(about 1 hour later)
European stock markets were trading lower in early Monday afternoon trade, as investors remained cautious following last week's sharp falls. Wall Street's two main share indexes were mixed in early Monday trading in New York after last week's sharp falls.
Amid fears over the US housing dip, and concern that higher global interest rates mean a credit squeeze, London's FTSE 100 was down 23 points at 6,192. In initial trading, the Dow Jones was down six points at 13,259, while the Nasdaq was up one point at 2,563.
Ahead of the start of trading in the US, Frankfurt's Dax was down 35 points at 7,416. Meanwhile, European indexes recovered towards the end of their trading day after earlier falling on nervousness ahead of the US open.
Earlier on Monday, the main Far East share indexes had closed up. Stocks declined sharply on Friday due to fears over the US housing market and concern about a possible credit
Japan's Nikkei 225 index had finished up 5.5 points at 17,289, while Hong Kong's Hang Seng added 88 points to end at 22,658. squeeze.
By 1500 BST, London's FTSE 100 was up 27 points to 6,242, while Frankfurt's Dax had added 16 points to 7,468.
Earlier on Monday, the main Asian share indexes closed up.
Japan's Nikkei 225 index finished up 5.5 points at 17,289.3, while Hong Kong's Hang Seng added 169.5 points to end at 22,739.9.
US mortgage woesUS mortgage woes
Wall Street's Dow Jones Industrial Average fell 1.5% on Friday, bringing its fall for the week to 4.2%, the largest weekly percentage drop since March 2003.Wall Street's Dow Jones Industrial Average fell 1.5% on Friday, bringing its fall for the week to 4.2%, the largest weekly percentage drop since March 2003.
Along with falling prices, the US housing market has been hit by crisis in the so-called sub-prime mortgage market.Along with falling prices, the US housing market has been hit by crisis in the so-called sub-prime mortgage market.
This sector, which offers high interest loans to higher risk customers or people on low incomes, has seen record numbers of defaults in the past year, putting severe financial pressure on a number of companies in the industry.This sector, which offers high interest loans to higher risk customers or people on low incomes, has seen record numbers of defaults in the past year, putting severe financial pressure on a number of companies in the industry.
The separate fear over a credit squeeze has been caused by central banks raising interest rates to combat inflation. The fear about a credit crunch has been caused by central banks raising interest rates to combat inflation.
Higher interest rates make it harder for firms, such a private equity groups, to continue to finance the ongoing takeover boom, leading to fears of a sharp downturn. Higher interest rates make it harder for firms, such a private equity groups, to continue to finance the ongoing takeover boom, leading to fears of a downturn.
The Bank of England and the European Central Bank are both due to unveil their latest interest rate decisions on Thursday, but analysts expect both to keep rates unchanged. The Bank of England and the European Central Bank are both due to make interest rate decisions on Thursday, but analysts expect both to keep rates unchanged.