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LONDON: World stock markets experienced mixed
fortunes on Tuesday as concerns lingered about a global credit
squeeze sparked by the crisis in the US home loan sector.
Share indices closed higher
in Tokyo and Hong Kong, while London’s FTSE 100 extended gains in
early trade.
But stocks fell in
Frankfurt and Paris as the European Central Bank again ploughed
billions of euros into money markets amid worries about a credit
crunch.
Wall Street had ended
marginally lower on Monday.
“The focus in the week
ahead will remain on the liquidity crisis, although the panic
appears to have been quelled for now,” Calyon economist Stuart
Bennett said in London.
“It is unlikely that we
are out of the woods yet as it will only take some bad news on hedge
funds, or funding problems to reignite fears.”
London’s FTSE 100 index
was up by 0.19 percent at 6,231.00 points nearing the half-way in
Tuesday trade.
The FTSE 100 had soared
2.99 percent on Monday, wiping out its losses of last week which
were caused by worries that a weak US mortgage sector could weigh on
global economic growth.
On Tuesday in Frankfurt,
the DAX 30 index of top German shares fell 0.21 percent to 7,458.81
points, while the Paris CAC 40 dropped 0.56 percent to 5,538.02.
The European Central Bank
on Tuesday injected an additional 7.7 billion euros ($10.5 billion)
into the money market.
The Frankfurt-based ECB,
which sets monetary policy in France, Germany, Italy and the 10
other nations that use the euro, had already pumped more than 200
billion euros into the market over the last three trading days.
Its action is designed to
head off a credit squeeze linked to turmoil in the US subprime, or
high-risk, mortgage market.
But elsewhere on Tuesday,
the Bank of Japan moved to withdraw billions of dollars of emergency
funds it had put into the banking system.
With global stock markets
showing signs of stabilising after their recent rollercoaster ride,
Japan’s central bank said it would drain the 1.6 trillion yen
($13.6 billion) it had injected into the money market since Friday.
In tandem with the US and
eurozone central banks, the BoJ had pumped funds into the banking
system for two business days —including one trillion yen on
Friday—to ensure commercial banks had ample liquidity to do
business.
The Tokyo Stock Exchange’s
benchmark Nikkei-225 index of leading shares gained 0.27 percent to
end at 16,844.61 points on Tuesday.
But lingering concerns over
subprime loans kept investors cautious about buying battered stocks,
analysts said.
“The market will continue to
trade in a jittery manner, but Japanese stocks are not on the verge
of collapse,” said Hideo Mizutani, chief strategist at Sieg
Securities.
Investors fear hedge funds
may be forced to dump shares to cover losses on securities backed by
US mortgages.
Wall Street bank Goldman
Sachs on Monday announced it had teamed up with a group of investors
to lead a three-billion-dollar bailout of a hedge fund it manages.
--AFP
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