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Wall Street shares decline again Wall Street shares decline again
(about 1 hour later)
US stocks were lower in mid afternoon trading, as investor jitters remain, despite the Federal Reserve injecting extra funds into the financial system. US stocks ended lower on Thursday after the head of the country's largest mortgage lender warned that the housing market slump could spark a recession.
After the Fed placed an extra $17.25bn (£8.6bn) to ease continuing fears of a credit squeeze, the Dow Jones index was down 37 points to 13,199. Following the comments of Countrywide boss Angelo Mozilo, the Dow Jones index finished down 0.4 points to 13,236.
The Nasdaq had also lost ground, falling 16 points to 2,537. Market confidence was also hit by the Federal Reserve putting a further $17bn (£8.6bn) into the financial system.
Continuing market turbulence and credit woes have been sparked by crisis in the US sub-prime mortgage sector. The Fed has now placed $120.5bn of funds to ease fears of a credit squeeze led by the sub-prime mortgage crisis.
Continuing fears The two other main US share indexes also fell on Thursday, with the Nasdaq dropping 11 points to end at 2,542, and the Standard & Poor's 500 losing 1.6 points to 1,463.
Despite the falls on the Dow Jones and Nasdaq, the main European share indexes closed up on Thursday. 'Not getting better'
Mr Mozilo said in an interview that the US housing slump, centred on record defaults in the sub-prime mortgage sector, was "certainly not getting better".
"I've seen this movie before, and the ending of the movie always ends up in some form of recession," he said.
Despite the falls on Wall Street, the main European share indexes had earlier closed up on Thursday.
London's FTSE advanced one point to 6,197, while Frankfurt's Dax added 11 points to 7,512.London's FTSE advanced one point to 6,197, while Frankfurt's Dax added 11 points to 7,512.
Earlier, Japan's benchmark Nikkei index had closed up 2.6%, while China's main stock index hit another record high. Prior to that, Japan's benchmark Nikkei index had closed up 2.6%, while China's main stock index hit another record high.
After several days of gains, analysts had begun to hope that the worst of the recent market turmoil may be over. 'Ongoing volatility'
After several days of gains earlier this week, analysts had begun to hope that the worst of the recent market turmoil may be over.
Yet Tony Russell, senior equities adviser at ABN AMRO Morgans, cautioned that volatility is likely to continue for some time.Yet Tony Russell, senior equities adviser at ABN AMRO Morgans, cautioned that volatility is likely to continue for some time.
"The market is getting more comfortable...but confidence can certainly be shattered by any more revelations," he said."The market is getting more comfortable...but confidence can certainly be shattered by any more revelations," he said.
Record mortgage defaults The recent market turbulence has centred the US sub-prime mortgage sector, while gives loans to people with poor credit history.
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.
Sub-prime default levels have risen to record highs over the past year in the face of higher US mortgage rates, raising fears that this could hamper credit availability in the broader market, beyond the home loan sector.Sub-prime default levels have risen to record highs over the past year in the face of higher US mortgage rates, raising fears that this could hamper credit availability in the broader market, beyond the home loan sector.
The Fed has now injected $120.5bn of emergency funds into the financial market over the last two weeks, while the European Central Bank and Bank of Japan have made similar moves. On Wednesday, Countrywide had cheered investors after Bank of America said it planned to invest $2bn in the firm.
On Wednesday investor confidence was cheered by the promising news that Bank of America plans to invest $2bn in one of the sub-prime market leaders, struggling US mortgage firm Countrywide Financial.
"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.