World shares higher as investors eye US rate cut
Friday, 31 August 2007
LONDON, Aug 30 (AFP): Global stocks rose Thursday as investors keep an eye on US Federal Reserve moves to combat housing woes that have battered world bourses in recent weeks.
Asian markets closed higher after a strong recovery on Wall Street overnight but early gains were pared in Tokyo and some other bourses as dealers awaited a speech Friday by Fed chairman Ben Bernanke. Wall Street reopens at 1330 GMT.
"The focus is back on the potential for interest rate cuts in the US with the investors being reassured by a letter sent by Federal Reserve chairman Ben Bernanke to a leading Democratic senator which hinted of a rate cut," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"However, volatility is likely to continue. Although we may get a rate cut at the same time we may see further difficulty in the subprime market with hedge funds reporting at the end of the month," he added.
In France meanwhile, a senior official at the Organisation for Economic Cooperation and Development (OECD) said the Fed would be mistaken to cut interest rates in response to the credit crisis.
The problems in the US mortgage market recently erupted due to "subprime" home borrowers with shaky credit histories defaulting on their loans. Investors then rushed to cover their losses, triggering fears of a liquidity squeeze.
Nearing the half-way point in Thursday's trade, London's FTSE 100 index of leading shares showed a gain of 0.51 per cent to 6,163.50 points.
Frankfurt's DAX 30 rose 0.10 per cent to 7,446.25 points and in Paris the CAC 40 jumped 0.70 per cent to 5,558.41.
Asian shares also won a lift.
"Asian shares are following Wall Street and recovered due to renewed sense that the Fed will solve this crisis," said Toshihiro Matsuno, equities research head at SMBC Friend Securities in Tokyo.
Asian markets closed higher after a strong recovery on Wall Street overnight but early gains were pared in Tokyo and some other bourses as dealers awaited a speech Friday by Fed chairman Ben Bernanke. Wall Street reopens at 1330 GMT.
"The focus is back on the potential for interest rate cuts in the US with the investors being reassured by a letter sent by Federal Reserve chairman Ben Bernanke to a leading Democratic senator which hinted of a rate cut," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"However, volatility is likely to continue. Although we may get a rate cut at the same time we may see further difficulty in the subprime market with hedge funds reporting at the end of the month," he added.
In France meanwhile, a senior official at the Organisation for Economic Cooperation and Development (OECD) said the Fed would be mistaken to cut interest rates in response to the credit crisis.
The problems in the US mortgage market recently erupted due to "subprime" home borrowers with shaky credit histories defaulting on their loans. Investors then rushed to cover their losses, triggering fears of a liquidity squeeze.
Nearing the half-way point in Thursday's trade, London's FTSE 100 index of leading shares showed a gain of 0.51 per cent to 6,163.50 points.
Frankfurt's DAX 30 rose 0.10 per cent to 7,446.25 points and in Paris the CAC 40 jumped 0.70 per cent to 5,558.41.
Asian shares also won a lift.
"Asian shares are following Wall Street and recovered due to renewed sense that the Fed will solve this crisis," said Toshihiro Matsuno, equities research head at SMBC Friend Securities in Tokyo.