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Euro stocks edge up on rate hope | |
(30 minutes later) | |
European stocks were ahead in early trade, spurred by hopes of an interest rate cut by the US Federal Reserve to help calm recent market volatility. | |
Shortly after opening the London FTSE was ahead by 0.80%, the Frankfurt Dax up by 0.54%, and the Paris Cac by 1%. | |
It came as leading shares in China, Hong Kong, Singapore and Seoul rose, but Japan's Nikkei index fell lightly. | |
Hopes of a US rate cut came after a US senator said the Fe would use "all available tools" to calm credit fears. | |
Recent market turmoil has been prompted by problems in the US mortgage market. | Recent market turmoil has been prompted by problems in the US mortgage market. |
But some analysts in Asia think the worst of the recent volatility is over. | But some analysts in Asia think the worst of the recent volatility is over. |
"Fears about the fallout from the US sub-prime mortgage sector are receding. Last week's drops appear overdone," said Lee Woo-hyun, an analyst at Kyobo Securities. | "Fears about the fallout from the US sub-prime mortgage sector are receding. Last week's drops appear overdone," said Lee Woo-hyun, an analyst at Kyobo Securities. |
"The markets are likely to continue the rebound." | "The markets are likely to continue the rebound." |
'Some comfort' | 'Some comfort' |
Recent falls in shares worldwide stocks have come in the wake of problems in the US sub-prime mortgage market, the sector that lends to people with poor credit records or who are on lower incomes. | Recent falls in shares worldwide stocks have come in the wake of problems in the US sub-prime mortgage market, the sector that lends to people with poor credit records or who are on lower incomes. |
A rise in defaults on home loans in the sub-prime market has raised fears that it will become harder for homebuyers and businesses to get loans, which could hamper investment and growth. | A rise in defaults on home loans in the sub-prime market has raised fears that it will become harder for homebuyers and businesses to get loans, which could hamper investment and growth. |
The stock market falls have led to many investors seeking to put their money into safer financial instruments, such as government bonds. | The stock market falls have led to many investors seeking to put their money into safer financial instruments, such as government bonds. |
Asian markets reacted well to comments made by US Senate Banking Committee chairman Senator Christopher Dodd after he had met Federal Reserve head Ben Bernanke and Treasury Secretary Henry Paulson. | Asian markets reacted well to comments made by US Senate Banking Committee chairman Senator Christopher Dodd after he had met Federal Reserve head Ben Bernanke and Treasury Secretary Henry Paulson. |
Mr Dodd said that Mr Bernanke "intends to utilise all the tools available to him" to try to prevent US housing and credit problems from worsening. | Mr Dodd said that Mr Bernanke "intends to utilise all the tools available to him" to try to prevent US housing and credit problems from worsening. |
Japanese investors remain wary however ahead of a key Bank of Japan meeting on Thursday, which will decide whether to raise interest rates or not. | Japanese investors remain wary however ahead of a key Bank of Japan meeting on Thursday, which will decide whether to raise interest rates or not. |
"The fact that the US stock market has stabilised to an extent gives investors some comfort," said Katsuhiko Hiroshige, an analyst at Traders & Co in Tokyo. | "The fact that the US stock market has stabilised to an extent gives investors some comfort," said Katsuhiko Hiroshige, an analyst at Traders & Co in Tokyo. |
But, he added, "it will be a while before investor sentiment recovers completely from the trauma of recent losses". | But, he added, "it will be a while before investor sentiment recovers completely from the trauma of recent losses". |