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| Stocks rebound on recovery hopes | |
| (20 minutes later) | |
| US and European stocks have risen, spurred by hopes of an interest rate cut by the US Federal Reserve to help calm recent market volatility. | US and European stocks have risen, spurred by hopes of an interest rate cut by the US Federal Reserve to help calm recent market volatility. |
| The Dow Jones index closed 1.1% ahead while London's FTSE 100 ended 1.8% up. | |
| Hopes of a US rate cut came after a US senator said the Fed would use "all available tools" to calm credit fears. | Hopes of a US rate cut came after a US senator said the Fed would use "all available tools" to calm credit fears. |
| Markets were also boosted as the head of the International Monetary Fund said recent turbulence would not have a big effect on global growth. | |
| Rodrigo Rato said it was possible GDP would be slightly lower as a result of the volatility, "but not in a dramatic way". | Rodrigo Rato said it was possible GDP would be slightly lower as a result of the volatility, "but not in a dramatic way". |
| Merger talk | |
| On Wall Street, the tech-based Nasdaq added 1.25% to 2,552.80 while the Dow Jones gained 145.27, or 1.11% to 13,236.13. | |
| London's leading shares finished 109.9 points ahead at 6,196. France's Cac added 1.8% and Germany's Dax put on 1.1%. | London's leading shares finished 109.9 points ahead at 6,196. France's Cac added 1.8% and Germany's Dax put on 1.1%. |
| Earlier, most Asian markets had closed in the black. | Earlier, most Asian markets had closed in the black. |
| Until the turmoil, mergers and acquisitions had been one of the US market's biggest influences in driving forward. | Until the turmoil, mergers and acquisitions had been one of the US market's biggest influences in driving forward. |
| Analysts said the re-emergence of deal talks had heartened investors, as a Dubai firm said it was investing in casino operator MGM Mirage. | Analysts said the re-emergence of deal talks had heartened investors, as a Dubai firm said it was investing in casino operator MGM Mirage. |
| Meanwhile shares in commodities exchange Nymex rose 6% on talk of a possible takeover. | |
| Recent market turmoil has been prompted by problems in the US mortgage market. | |
| But some analysts think the worst of the recent volatility is over. | But some analysts 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." |
| Bond lure | |
| Recent falls in shares worldwide 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 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". |