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European stocks echo upward trend Wall Street makes cautious start
(about 5 hours later)
European stocks have posted further gains, following the trend of markets in Asia and the US as shares continue to recover from recent losses. US stocks have made a mixed start to trade on Wednesday, with the main indexes broadly flat.
London's FTSE 100 index and Germany's Dax were up 1%, while France's Cac 40 index was 1.1% higher. After rising in the first few minutes of trade, the Dow Jones index fell back to stand up 17.7 points at 13,254 while the Nasdaq was down 7.74 at 2,545.
The flat start in the US trimmed gains that had been seen on European markets.
In early afternoon trade in Europe, Germany's Dax index was up 0.5%, France's Cac 40 was 0.3% higher while London's FTSE 100 was barely changed.
Earlier, Japan's benchmark Nikkei index had closed up 2.6%, while China's main stock index hit another record high.Earlier, Japan's benchmark Nikkei index had closed up 2.6%, while China's main stock index hit another record high.
Analysts are now beginning to hope that the worst of the recent market turmoil may be over. After several days of gains, analysts have begun to hope that the worst of the recent market turmoil may be over.
Comfortable Yet Tony Russell, senior equities adviser at ABN AMRO Morgans, cautioned that volatility is likely to continue for some time.
The rises in Asia came after leading US indexes - including the Dow Jones Industrial Average, the Standard & Poor's 500 and the Nasdaq Composite - all added more than 1% on Wednesday. "The market is getting more comfortable...but confidence can certainly be shattered by any more revelations," he said.
"We're back to happy days again," said Tony Russell, senior equities adviser at ABN Amro Morgans. Promising signs?
"The market is getting more comfortable with the sub-prime issue but confidence can certainly be shattered by any more revelations. I'd think that we'll see some further volatility in the market," he added. The recent market turmoil was triggered by problems in the US mortgage market, and especially in the so-called sub-prime sector that makes loans to people with poor credit history.
The recent turmoil was triggered by problems in the US mortgage market, and especially in the so-called sub-prime sector that makes loans to people with poor credit history.
Sub-prime default levels rose following higher interest rates in the US, raising fears that this could hamper credit availability in the broader market, beyond the home loan sector.Sub-prime default levels rose following higher interest rates in the US, raising fears that this could hamper credit availability in the broader market, beyond the home loan sector.
However news that Bank of America plans to invest $2bn in one of the sub-prime market leaders, struggling US mortgage firm Countrywide Financial, was hailed as a promising sign. However, news on Wednesday that Bank of America plans to invest $2bn in one of the sub-prime market leaders, struggling US mortgage firm Countrywide Financial, was hailed as a promising sign.
"The fact that M&A [mergers and acquisitions] activity resurfaced in the US market means liquidity may have started to come back," said Masayoshi Yano, senior manager of investment information at Tokai Tokyo Securities."The fact that M&A [mergers and acquisitions] activity resurfaced in the US market means liquidity may have started to come back," said Masayoshi Yano, senior manager of investment information at Tokai Tokyo Securities.