The US stock exchange opened with an unexpected upswing on Thursday, as European stocks dropped due to concerns over the financial health of French banks.
After an early rebound, bank shares across Europe were down, some sharply, including Societe Generale, which has followed up Wednesday's 15 per cent decline with another eight per cent drop.
As a result, France's CAC-40 underperformed its peers, trading 0.92 per cent lower, while the FTSE 100 index of leading British shares rose 0.44 per cent. Germany's DAX fell 0.15 per cent.
The wide swings in recent days across time zones highlight how volatile markets are at the moment due to concerns over the global economy and debt levels in the US and Europe.
"It just goes to show how quickly confidence can evaporate. Markets are incredibly volatile at the moment," said Angus Campbell, head of sales at Capital Spreads.
"Just because you see a bounce early on, does not mean it is going to be maintained. There are concerns, despite what central banks and ratings agency, say that French banks are over exposed to the peripheries."
European concerns
French President Nicolas Sarkozy called key ministers back from holiday to talks in Paris on Wednesday.
His office described the talks as a "working meeting on the economic and financial situation".
An information brief issued afterwards stated: "The head of state [Nicolas Sarkozy] reiterated that the commitments to reduce the public deficit are inviolable and will be adhered to no matter how the economic situation evolves."
Local media described the meeting as an attempt to reassure markets and protect France's top-notch credit rating.
France will decide on August 24 on a new budget action to ensure it meets its target to cut the public deficit.
Meanwhile, Italy is expected to call an emergency cabinet meeting as early as Friday to approve new austerity measures to balance the budget by 2013.
Economy Minister Giulio Tremonti told parliament that he would present the austerity measures to President Giorgio Napolitano on Thursday, but could not discuss them while the markets were still open.
Prime Minister Silvio Berlusconi told unions that the measures would be approved on August 18 by decree.
Drops in Asia
Asian stock markets mostly fell on Thursday but closed off their earlier lows as traders went bargain-hunting despite huge falls on Wednesday in Europe and on Wall Street. Tokyo closed 0.63 per cent lower while Sydney closed flat, edging down 0.5 points. Hong Kong fell 0.95 per cent after losing 2.54 percent on opening. Singapore shares closed at a 14-month low on Thursday and Malaysian stocks sagged 0.3 per cent. But Seoul closed 0.62 per cent higher at 1,817.44 while Shanghai was up 1.27 per cent. Asian markets have suffered a rollercoaster week, tumbling from Friday to Tuesday on eurozone fears and the US debt downgrade before rebounding Wednesday. Worried US The Dow Jones industrial average dropped 519.83 points or 4.62 per cent by closing on Wednesday, while the technology-heavy NASDAQ Composite Index fell 101.47 points or 4.09 per cent. Tuesday's announcement that the US central bank would keep interest rates near zero for two years had fuelled a short-lived boost in the global market, but failed to assuage worried investors. "So far, panic has eased but fear remains,'' explained Kit Juckes, an analyst at Societe Generale. World stock markets had been plummeting since the start of August after a downgrade of the US credit rating on Friday, and the ever-expanding eurozone debt crisis. Many investors fear the US may be heading back into recession. |
Source: Al Jazeera and agencies |
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