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Global shares climb on US rally Uncertainty prompts mixed markets
(about 3 hours later)
Wall Street shares recovered from an early dip as investors hoped for an interest rate cut after mixed data on the state of the US economy. Uncertainty over whether a US interest rate cut was imminent saw mixed trading on Wall Street - after European markets had surged ahead.
The upward movement on Wall Street prompted European markets to also rally in late trading. The Dow Jones slipped 0.4% in afternoon trading after Lehman Brothers downgraded major investment banks, though the Nasdaq was 0.2% ahead.
By late-morning in New York, the Dow Jones was 0.1% up at 13,306 points while the Nasdaq surged 0.9% higher. Early upward movement in New York had prompted European markets to rally.
The FTSE 100 in London and the Cac in Paris both closed 1.3% ahead, while Germany's Dax added 1.2%.The FTSE 100 in London and the Cac in Paris both closed 1.3% ahead, while Germany's Dax added 1.2%.
Commerce Department figures showed the US economy grew at an annual rate of 4% in the second quarter of the year. Credit concerns
The Dow, which lost 48 points to 13,241.3 was dragged down, in part, by the shares of Goldman Sachs, Bear Stearns and Morgan Stanley and Merrill Lynch all falling.
This followed Lehman Brothers saying that the firms' third-quarter earnings would all be hit by woes in the credit market - as defaults for the sub-prime mortgage sector continued.
However analysts said that while concerns that the credit squeeze was hurting the US economy were still prevalent.
But they added the chances of the Federal Reserve cutting rates had grown because of Commerce Department data which showed the US economy grew at an annual rate of 4% in the second quarter of the year.
This was an improvement on the initial estimate of 3.4% from several weeks ago but still below some analysts' expectations.This was an improvement on the initial estimate of 3.4% from several weeks ago but still below some analysts' expectations.
Analysts said that with concerns that the credit squeeze was hurting the US economy still prevalent, the chances of the Federal Reserve cutting rates had grown.
Bernanke messageBernanke message
Comments from Fed boss Ben Bernanke on Wednesday had already lifted hopes of such a cut.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.Mr Bernanke had said he was "prepared to act as needed" to ensure credit market troubles did not adversely affect the economy.
A report showing a growth in the number of Americans claiming unemployment benefits had also made investors cautious, analysts added. However a report showing a growth in the number of Americans claiming unemployment benefits had also made investors cautious, analysts added.
"The jobless claims increasing ... is not a sign of economic strength," said Charles Campbell, of Miller Tabak in New York."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.""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.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.