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Global stock markets stage rally as volatility continues US shares end on a high as European stock markets rebound
(about 7 hours later)
Global stock markets have staged a partial recovery after a week of precipitous falls and volatility. Shares in Europe and US have rebounded after a turbulent week in which stock markets tumbled to multi-month lows.
London's FTSE 100 index was up over 1% in mid-afternoon trading, while Germany's Dax was up 1.76% and France's Cac 40 was up more than 2%. On Friday US stocks closed more than 1% up, with the S&P 500 posting its biggest gain in more than a week.
On Wall Street, the Dow Jones index opened nearly 1% higher after better-than-expected US industrial production data helped steady the ship. Europe's main indexes closed higher, having fallen sharply over concerns that the global economic recovery was running out of steam.
Fears over a weakening global economic outlook had unsettled investors. Despite the rises, Charles Stanley's Jeremy Batstone-Carr saying: "I'm not sure we're out of the woods."
Poor economic and corporate data, along with worries about the impact of the Ebola crisis, had sent stock markets into a nosedive.
On Friday, London's FTSE 100 closed 1.85% up at 6,310.29 points, while bourses in Paris and Frankfurt ended 3% ahead.
The FTSE 100 had fallen 10% since early September, wiping £175bn off the value of listed businesses.The FTSE 100 had fallen 10% since early September, wiping £175bn off the value of listed businesses.
Wall Street's Dow Jones index closed 263.1 points up, or 1.63%, to 16,380.34, while the S&P 500 gained 23.98 points, or 1.3%, to 1,886.74.
'Turbulence''Turbulence'
Explaining the recent convulsions in the markets, Carl Weinberg, chief economist and managing director at New York-based consultancy High Frequency Economics, said investors had taken fright over the faltering European economy and a slew of weaker global economic data.Explaining the recent convulsions in the markets, Carl Weinberg, chief economist and managing director at New York-based consultancy High Frequency Economics, said investors had taken fright over the faltering European economy and a slew of weaker global economic data.
Some "untested" economic indicators had given the impression the European market was recovering when it was not, Mr Weinberg argued.Some "untested" economic indicators had given the impression the European market was recovering when it was not, Mr Weinberg argued.
"The underlying economy is as bad now as it was a week or two weeks ago," he told the BBC."The underlying economy is as bad now as it was a week or two weeks ago," he told the BBC.
"But the perceptions have changed and that's causing turbulence in the markets.""But the perceptions have changed and that's causing turbulence in the markets."
Steven Saywell, head of foreign exchange strategy at BNP Paribas, said the real concern over the faltering eurozone economy was inflation, currently running at 0.3%.Steven Saywell, head of foreign exchange strategy at BNP Paribas, said the real concern over the faltering eurozone economy was inflation, currently running at 0.3%.
"We believe the risk is it could fall even further," he said."We believe the risk is it could fall even further," he said.
BNP Paribas believes European Central Bank president Mario Draghi should take bold measures to buy sovereign bonds in an attempt to convince investors that the rate of inflation would increase.BNP Paribas believes European Central Bank president Mario Draghi should take bold measures to buy sovereign bonds in an attempt to convince investors that the rate of inflation would increase.
'Market needs volatility''Market needs volatility'
This period of volatility was no worse than it had been in the past, Mr Weinberg maintained, and was a necessary condition if markets were "to make money".This period of volatility was no worse than it had been in the past, Mr Weinberg maintained, and was a necessary condition if markets were "to make money".
In recent years, central banks maintaining a policy of low interest rates had dampened market speculation, but now that it was a question of when rates would rise, rather than whether, this was stimulating investor activity, Mr Weinberg argued.In recent years, central banks maintaining a policy of low interest rates had dampened market speculation, but now that it was a question of when rates would rise, rather than whether, this was stimulating investor activity, Mr Weinberg argued.
But such speculation was countered by recent comments from Andrew Haldane, the Bank of England's chief economist.But such speculation was countered by recent comments from Andrew Haldane, the Bank of England's chief economist.
He said UK interest rates should remain low to avoid long-term economic stagnation, after giving a downbeat assessment of the UK economy.He said UK interest rates should remain low to avoid long-term economic stagnation, after giving a downbeat assessment of the UK economy.
Weaker global growth, low wage growth and financial and political risks contributed to his more cautious view.Weaker global growth, low wage growth and financial and political risks contributed to his more cautious view.
"This implies interest rates could remain lower for longer, certainly than I had expected three months ago," he said in a breakfast meeting speech to business leaders."This implies interest rates could remain lower for longer, certainly than I had expected three months ago," he said in a breakfast meeting speech to business leaders.