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Stock markets rally globally
(China Daily)
Updated: 2008-10-21 07:05 LONDON: World stocks made strong gains Monday as investors took comfort in global efforts to prop up the banking system, allowing for some bargain hunting. European shares followed Asia higher and Wall Street opened positively in early trade. Gold rose after recent losses, the dollar regained earlier losses and demand fell for government bonds. Chinese stocks ended higher following reports on the government's new policies to spur domestic demand and better-than-expected economic data. The benchmark Shanghai Composite Index edged up 2.25 percent to 1974.01 points. Global interbank lending rates - at the center of fears about the industry freezing up - fell significantly, suggesting that government efforts to provide support were bearing fruit. "There's a perception that the credit squeeze could be beginning to abate thanks to measures from global authorities over the past couple of weeks," said Philip Shaw, chief economist at Investec. European Central Bank President Jean-Claude Trichet added to the confidence-building over the weekend, pledging in a radio interview to do whatever it takes to restore confidence to financial markets. He said the ECB was working very closely with the US Federal Reserve to solve the financial crisis that has crippled equity markets for more than a year. Also over the weekend, South Korea promised $130 billion in state guarantees and capital injections for banks, while the Dutch government said it would prop up financial group ING with around 10 billion euros ($13.52 billion). All this was combining to send stocks higher. The pan-European FTSEurofirst 300 was up 2 percent while Japan's Nikkei closed up 3.6 percent. Emerging market stocks as measured by MSCI gained 2.3 percent. "Whilst we are clearly not out of the woods yet, investors are looking for anything to hang their hats on," said Chris Hossain, senior sales manager at ODL Securities. ING was up 18 percent after it agreed to a cash injection as well as scrapping executive bonuses and its year-end dividend. The dollar was flat against a basket of major currencies but lost early gains against the yen, which tends to fall when investors become more willing to take risks. Commodity prices pushed higher with oil extending gains to nearly $74 a barrel and gold was up around 2 percent. Euro zone government bonds were flat to lower on the eased tension over the credit crisis. Agencies |
