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Global stocks in volatile
trading
BBC
Wednesday Aug 29, 2007
European shares have seen mixed trading on Wednesday
as US housing and credit woes continue to cast a shadow over global
stock markets.
After initially falling 43 points, the UK's FTSE
100 index was up 24 points to 6,126 by early afternoon. Germany's
Dax had lost 11 points to 7,419.
The latest share turbulence was caused by Merrill Lynch warning
that the credit squeeze will hurt bank profits.
Investor confidence was also hit by weak US consumer sentiment
figures.
The Dax was also hit by a fall in German consumer confidence
in July, blamed on the turmoil in the markets.
(Article continues below)
Earlier, Japan's main Nikkei index had closed down 275 points,
or 1.7%, at 16,013.
On Tuesday, the US Dow Jones index lost 280 points, or 2.1%,
to close at 13,042.
Stock downgrades
The latest warning about the impact of the problems in the credit
market - centred on the crisis in the US sub-prime mortgage sector
- was given by brokers at investment bank Merrill Lynch.
They downgraded their opinion of stocks in three firms exposed to
the sub-prime sector - Bear Stearns, Lehman Brothers and Citigroup.
The mood of global investors has been further hit by released
minutes of the most recent meeting of the Federal Reserve, which
suggested a US interest rate cut might not be imminent.
The minutes showed that while the committee's members realised
that the problems in the financial markets might need a policy
response, they did not act at the start of this month because
they were keeping their focus on inflation.
"Everyone is scared," said Shoji Yoshikoshi, senior
investment strategist at Mitsubishi Capital UFJ Securities.
"It's like walking in the dark because we have yet to get
the full picture of the sub-prime loan problems."
The sub-prime mortgage sector gives higher risk loans to people
with poor credit histories.
Sub-prime default levels have risen to record highs in the US
over the past year in the face of higher mortgage rates.
This has raised fears that this could hamper credit availability
in the broader market, not just in America, but around the world.
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