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| European stocks hit by rate fears | European stocks hit by rate fears |
| (10 minutes later) | |
| European stock indexes have remained under pressure on concerns that the region's central banks will not follow the US in slashing interest rates. | European stock indexes have remained under pressure on concerns that the region's central banks will not follow the US in slashing interest rates. |
| On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years in an effort to avert a full-blown recession. | On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years in an effort to avert a full-blown recession. |
| However, the European Central Bank hinted it would not follow suit, and the Bank of England was unlikely to accelerate rate cuts, analysts said. | However, the European Central Bank hinted it would not follow suit, and the Bank of England was unlikely to accelerate rate cuts, analysts said. |
| Stock indexes are set to be highly volatile in coming weeks, they warned. | Stock indexes are set to be highly volatile in coming weeks, they warned. |
| The UK's FTSE 100 index was 44 points, or 0.5%, lower at 5,696, erasing earlier gains. Germany's Dax lost 0.4%, while France's Cac added 0.6%. | The UK's FTSE 100 index was 44 points, or 0.5%, lower at 5,696, erasing earlier gains. Germany's Dax lost 0.4%, while France's Cac added 0.6%. |
| Japan's Nikkei 225 earlier closed up 2%, and Hong Kong's Hang Seng added 8%. | Japan's Nikkei 225 earlier closed up 2%, and Hong Kong's Hang Seng added 8%. |
| Caution rules | Caution rules |
| Despite a late rally in stock prices on Tuesday and a positive session in Asia on Wednesday, investors were still being cautious. | Despite a late rally in stock prices on Tuesday and a positive session in Asia on Wednesday, investors were still being cautious. |
| Gains were also being limited by pre-market electronic trading in US shares, which indicated that stock indexes were set to fall when the New York Stock Exchange opens later. | Gains were also being limited by pre-market electronic trading in US shares, which indicated that stock indexes were set to fall when the New York Stock Exchange opens later. |
| "Caution still rules the long-term picture," said Markus Steinbeis of Pioneer Investments. | "Caution still rules the long-term picture," said Markus Steinbeis of Pioneer Investments. |
| Bank of England governor Mervyn King said that the UK faces its toughest economic challenges since 1997. | Bank of England governor Mervyn King said that the UK faces its toughest economic challenges since 1997. |
| Even so, while the Bank is widely tipped to reduce rates to 5.25% from 5.5% next month, analysts are saying that more extensive cuts are unlikely. This is because the Bank said the risk of inflation had "worsened markedly". | Even so, while the Bank is widely tipped to reduce rates to 5.25% from 5.5% next month, analysts are saying that more extensive cuts are unlikely. This is because the Bank said the risk of inflation had "worsened markedly". |
| Speaking to the BBC, billionaire investor George Soros said it was going to be difficult for the UK and US to avoid a recession. | Speaking to the BBC, billionaire investor George Soros said it was going to be difficult for the UK and US to avoid a recession. |