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US rises boost European markets Global shares climb on US rally
(about 9 hours later)
European stock markets opened higher on Thursday following Wednesday's recovery in the US. Wall Street shares recovered from an early dip as investors hoped for an interest rate cut after a mixed batch of economic signals.
The FTSE 100 index was up 0.9% in early trade, the Dax rose 0.4% in Frankfurt and the Cac rose 1.1% in Paris. The upward movement on Wall Street, prompted European markets to also rally in late trading.
On Wall Street, the Dow Jones closed 1.9% higher after comments from Federal Reserve boss Ben Bernanke lifted hopes of a US interest rate cut. By late-morning in New York, the Dow Jones was 0.1% up at 13,306 points while the Nasdaq surged 0.9% higher.
Asian stock markets also rose on the news, with the Nikkei in Tokyo closing up 0.9% at 16,153.8. The FTSE 100 in London and the Cac in Paris both closed 1.3% ahead, while Germany's Dax added 1.2%.
The US Federal Reserve chief said he was "prepared to act as needed" to ensure credit market troubles did not adversely affect the economy. Commerce Department figures showed that the US economy grew at an annual rate of 4% in the second quarter of the year.
The Federal Reserve's interest-rate setters will meet on 18 September when they will consider whether to match their recent cut in the rate at which they lend to banks with a cut in the benchmark Federal Funds rate. This was an improvement on the initial estimate of 3.4% but below some analysts' expectations.
Wednesday's rises on Wall Street meant that New York shares had clawed back almost all of their losses from Tuesday. Analysts said that while concern that shrinking credit was hurting the US economy persisted, the chances of the Federal Reserve cutting rates had grown.
These falls were triggered by warnings about the profitability of some of the world's biggest banks with financial exposure to the troubled sub-prime mortgage sector. Comments from Fed boss Ben Bernanke on Wednesday had already lifted hopes of such a cut.
Mr Bernanke had said he was "prepared to act as needed" to ensure credit market troubles did not adversely affect the economy.
Jobless warning
Analysts said a report showing a growth in the number of Americans claiming unemployment benefits had also made investors cautious.
"The jobless claims increasing ... is not a sign of economic strength," said Charles Campbell, of Miller Tabak in New York.
"Given the other issues in the financial area, you need to have the consumer in the game and in order to do that they have to have jobs in order to spend."
Earlier on Thursday, Asian shares had risen - spurred on by Wednesday's big rises in US stocks - with the Nikkei in Tokyo closing up 0.9% at 16,153.8.