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US stocks mirror world share rise US stocks fall as elsewhere rises
(about 2 hours later)
US stocks edged up at the start of the week, echoing the pattern of other world shares after the US Federal Reserve cut a key bank lending rate. US stocks have fallen in afternoon trade - reversing earlier gains, amid ongoing fears over market volatility.
The Dow Jones industrial average added 0.06% to 13,086.72 by 1010 local time (1510BST). London's FTSE 100 index rose 0.45% and France's Cac-40 gained 0.95%. The Dow Jones industrial average dropped 0.65%, to 12,993.81.
A rise in US home loan defaults has triggered fears of a financial crisis. But European shares closed higher, led by mining and metals companies. France's Cac-40 closed 0.67% up and London's FTSE 100 rose 0.24%.
On Friday the Fed cut the rate of overnight loans to banks to try and stall the recent spate of losses. A surprise move by the US to cut a key bank lending rate on Friday had buoyed markets worldwide, but concerns over credit problems persisted in the US.
EU spokesperson Amelia Torres said stocks appeared to be calmer on Monday, but added that it was premature to predict what impact the turmoil would have on the EU. A rise in US home loan defaults has triggered fears of a wider financial crisis.
But US Republican senator Richard Shelby, a former chairman of the US Senate's banking and housing committee, said the crisis would worsen before things improved. Shares in JP Morgan Chase fell 3% to $45.61 while Citigroup dropped 1.8% to $47.95 on the S&P 500 index.
"I think there was too much complacency coming into the market today," said Michael James, senior trader at regional investment bank Wedbush Morgan.
On Friday the Fed cut the rate of overnight loans to banks to try to stall the recent spate of losses.
US Republican senator Richard Shelby, a former chairman of the US Senate's banking and housing committee, warned that the crisis would worsen before things improved.
Some firms would "not survive" the current volatility and some rates on certain sub-prime loans were set to increase, he said.Some firms would "not survive" the current volatility and some rates on certain sub-prime loans were set to increase, he said.
Housing slow-downHousing slow-down
The recent market volatility has been prompted by a wave of mortgage defaults in the US as the housing market slowed dramatically after a series of interest rate rises that have made paying back loans more expensive.The recent market volatility has been prompted by a wave of mortgage defaults in the US as the housing market slowed dramatically after a series of interest rate rises that have made paying back loans more expensive.
Earlier on Monday, US lender Thornburg Mortgage, said it had sold $20.5bn of assets. Earlier on Monday, US lender Thornburg Mortgage said it had sold $20.5bn of assets.
The firm, which has been severely hit by credit problems, said it had offloaded billions of dollars worth of mortgage-backed securities in a bid to better its financial position. The firm, which has been severely hit by credit problems, said it had offloaded billions of dollars worth of mortgage-backed securities in an attempt to better its financial position.
Financial shares have been hard hit due to the huge liabilities of banks and other financial firms linked to the unstable sub-prime mortgage sector.Financial shares have been hard hit due to the huge liabilities of banks and other financial firms linked to the unstable sub-prime mortgage sector.
The sub-prime sector makes loans to high-risk individuals and charges them higher rates of interest.The sub-prime sector makes loans to high-risk individuals and charges them higher rates of interest.
The sector boomed when thousands of people took out loans during the housing boom that petered out in early 2006.The sector boomed when thousands of people took out loans during the housing boom that petered out in early 2006.
Worldwide stocksWorldwide stocks
Earlier on Monday, Japan's Nikkei share index had closed 3% up, while Hong Kong's Hang Seng index ended 5.6%. Japan's Nikkei share index closed 3% up on Monday, while Hong Kong's Hang Seng index ended 5.6%.
The Nikkei had seen its biggest one-day fall in nearly six years on Friday, and other Asian markets had also slumped.The Nikkei had seen its biggest one-day fall in nearly six years on Friday, and other Asian markets had also slumped.
People still feel the market isn't really stable Kingston Lin, Prudential Brokerage.People still feel the market isn't really stable Kingston Lin, Prudential Brokerage.
At Monday's close, the Nikkei was at 15,732.48 points, up 458.80 points, or 3%, from Friday.At Monday's close, the Nikkei was at 15,732.48 points, up 458.80 points, or 3%, from Friday.
South Korean shares also surged ahead, with its Composite Stock Price Index closing up 5.7% at 1,731.27, its biggest percentage gain in more than five years, according to the Korea Exchange.South Korean shares also surged ahead, with its Composite Stock Price Index closing up 5.7% at 1,731.27, its biggest percentage gain in more than five years, according to the Korea Exchange.
Australian shares closed up 4.6% and Chinese stocks were ahead by 5.33%.Australian shares closed up 4.6% and Chinese stocks were ahead by 5.33%.
Financial stocks, which had been hardest hit in the recent sell-off, led the Asian rebound, pushing MSCI's index of Asian financial stocks up 5.3%. India's benchmark share index opened 2.6% higher, tracking other Asian markets.
India's benchmark share index opened 2.6% higher on Monday, tracking other Asian markets.
The Reserve Bank of Australia injected $2.67bn into the banking system to ward off pressure on some short-term market interest rates.The Reserve Bank of Australia injected $2.67bn into the banking system to ward off pressure on some short-term market interest rates.