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US shares recover from declines US shares slide on 2008 outlook
(about 4 hours later)
US shares have risen in Tuesday trading on Wall Street, lifted by bargain hunters buying up cheap stocks following Monday's sharp falls. US shares fell on Tuesday after the Federal Reserve slashed its growth forecast for 2008, and more woes were suffered by a large mortgage lender.
With analysts saying sentiment had also been lifted by strong results overnight from Hewlett-Packard, the main Dow Jones index was up 98 points to 13,056. The Fed projected US growth to slow to between 1.8% and 2.5% - from its 2.5% to 2.75% forecast issued in June.
However, gains were limited by ongoing US mortgage and credit market concerns. Having been ahead for most of the day, the Dow Jones index 0.7% lower by mid-afternoon. The Nasdaq lost 1.32%
Home loan group Freddie Mac was the latest to warn of woe in the mortgage sector, posting a $2bn (£1bn) loss.Home loan group Freddie Mac was the latest to warn of woe in the mortgage sector, posting a $2bn (£1bn) loss.
The company made the loss in the three months to 30 September, and said it had needed to set aside $1.2bn to cover bad mortgage debt. Shares fell 27% after it revealed the loss in the three months to 30 September, and said it had needed to set aside $1.2bn to cover bad mortgage debt.
It is one of the two government-sponsored enterprises that lend money to banks to use for mortgages, and it had been thought that its loan book did not have as much exposure to bad debt as some of the commercial banks.It is one of the two government-sponsored enterprises that lend money to banks to use for mortgages, and it had been thought that its loan book did not have as much exposure to bad debt as some of the commercial banks.
'Risk aversion' Analysts said bargain hunters had helped European shares recover from their Monday falls.
Analysts said bargain hunters had also helped European shares recover from their Monday falls.
In Europe, London's main FTSE 100 index added 1.7%, while Frankfurt's Dax closed 1.6% up and Paris' Cac advanced 1.4%.In Europe, London's main FTSE 100 index added 1.7%, while Frankfurt's Dax closed 1.6% up and Paris' Cac advanced 1.4%.
'Risk aversion'
Analysts said US investors remained fearful that ever more global banks would reveal their exposure to bad American mortgage debt and the resulting credit crisis.Analysts said US investors remained fearful that ever more global banks would reveal their exposure to bad American mortgage debt and the resulting credit crisis.
"The concern is that if there are unknown losses still to be recorded, the risk aversion that has been present in markets will remain," said Tony Brennan, equity strategist at Deutsche Bank."The concern is that if there are unknown losses still to be recorded, the risk aversion that has been present in markets will remain," said Tony Brennan, equity strategist at Deutsche Bank.
"It's a Black November," said Masayoshi Okamoto, head of dealing at Japan's Jujiya Securities."It's a Black November," said Masayoshi Okamoto, head of dealing at Japan's Jujiya Securities.
Tokyo's Nikkei 225 closed up 1.1% on Tuesday after sentiment was buoyed by a takeover bid for one of the country's largest banks.Tokyo's Nikkei 225 closed up 1.1% on Tuesday after sentiment was buoyed by a takeover bid for one of the country's largest banks.
A group of investors led by US buyout firm JC Flowers are bidding about $1.8bn for just under a third of Shinsei Bank.A group of investors led by US buyout firm JC Flowers are bidding about $1.8bn for just under a third of Shinsei Bank.
On the commodities market, colder weather in the US and the falling price of the dollar helped push the price of US light, sweet crude oil rise $1.80 to $96.44 a barrel while Brent crude added $1.83 to $94.11.On the commodities market, colder weather in the US and the falling price of the dollar helped push the price of US light, sweet crude oil rise $1.80 to $96.44 a barrel while Brent crude added $1.83 to $94.11.