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US shares mixed before rate vote US shares climb before rate call
(about 2 hours later)
US stocks were mixed in early Tuesday trading on Wall Street as expectations of a cut in interest rates were offset by weaker consumer confidence data. US stocks have gained ground on Wall Street expectations of a further cut in interest rates to shore up the world's largest economy.
While the main Dow Jones index was up 25 points to 12,409, the Nasdaq had slipped 13 points to 2,337. The main Dow Jones index ended trading up 96.41 points, 0.78%, at 12,480.30, while the Nasdaq rose 0.35% to 2,358.
Although investors are confident the US Federal Reserve will cut rates to 3.25% or even 3% on Wednesday, figures showed consumer sentiment fell in January. Investors are confident the US Federal Reserve will cut rates to 3.25% or even 3% on Wednesday.
In Europe, the UK's FTSE was up 0.9%, while Germany's Dax had added 0.75%. The passage of a $150bn economic stimulus plan by the US House of Representatives also cheered markets.
Wall Street's gains followed a strong day of trading in Europe where the UK's FTSE was up 1.7% and Germany's Dax added 1.1%.
Japan's Nikkei had earlier closed up 3%.Japan's Nikkei had earlier closed up 3%.
Weak data 'Fragile markets'
Last week, the Fed cut US interest rates to 3.5% from 4.25% in an unscheduled emergency move.Last week, the Fed cut US interest rates to 3.5% from 4.25% in an unscheduled emergency move.
Markets look likely to extend a roller-coaster ride, at least in the first half of 2008 when more dismal news about the US economy is expected to be released Lee Kyung-soo, an analyst at Daewoo Securities The move was designed to shore up plummeting global stock markets, which were unsettled by growing fears of a US recession.
Analysts had already warned that further weak American economic data could bring shares back down again, despite the expected further US rate cut. The Fed is expected to cut the cost of borrowing by at least another quarter of a percentage point when it finishes its two-day meeting on Wednesday.
"Expectations for further US rate cuts are lifting markets, but whether the market could sustain the gains, it's up to a series of US economic data due soon," said Lee Kyung-soo, an analyst at Daewoo Securities. The US economy is expected to slow sharply this year.
"Markets look likely to extend a roller-coaster ride, at least in the first half of 2008 when more dismal news about the US economy is expected to be released." Some economists are forecasting a recession as turmoil in the housing and financial markets hits ordinary households.
Wall Street's main Dow Jones index closed Monday trading up 1.45% or 177 points. "The Fed is still going to do a 50 basis points rate cut," said Michael Darda, chief economist at MKM Partners.
"I don't think they're going to run the risk of disappointing what they believe are very fragile credit markets."