martes, 9 de agosto de 2011

Shares back up in volatile trade

European shares have recovered heavy losses made in a volatile morning's trading, as US markets rose in early trading on Wall Street.
The UK's FTSE 100 index ended up 1.9%, after having fallen by 5.5% at one point. France's Cac added 1.6%, while German's Dax finished down just 0.1%.
Yet traders remain on edge about the levels of debt facing the US and some eurozone economies.
The Federal Reserve is due to make a statement later.
The main US index, the Dow Jones, was up 1.7%, while the Nasdaq had added 3.3%.
"Stock dumpers have turned into bargain hunters today," said Henk Potts from Barclays Capital.
The Fed, the US central bank, is set to make its comments following the latest meeting of its open markets committee (FOMC). Traders are looking for it to offer some sort of help.
Investors remain concerned that the high national debt levels could impact on already weak economies.
Those worries helped spark Monday's share market rout after the US government's credit rating was downgraded over the weekend from the top AAA grade.
Help
New York trader Doreen Mogavero: "The views here are very polarised"
"People are hoping the Fed is working on a plan that will come out later today, and that, along with yesterday's sell-off, is why we're rising now," said Jeff Duncan, president of Duncan Financial Management.
Sarah Wasserman of Schaeffer's Investment Research, was also waiting for some move by the monetary authorities: "While the Fed's been noncommittal about additional monetary easing, Friday's downgrade has spurred hopes that additional assistance from the government could, perhaps, be on the horizon."
Some observers say the Fed has few weapons left.
When the bell rang to signal the start of the trading day, the floor of the New York Stock Exchange was buzzing.
But unlike on Monday, when all that activity resulted in a sharp sell off, the major US indexes opened higher. Many traders though remain sceptical that this rally will last.
The point they make is that the risks to the US economy haven't gone away. They are also taking a wait and see approach to the Federal Reserve meeting this Tuesday.
The question is: will the Fed chairman Ben Bernanke give them what they want and signal policy changes to help keep the recovery on track? And if so, what would those policies look like?
There have been plenty of critics here who say the Fed's recent bond buying programmes haven't worked. The risk according to floor trader Doreen Mogavero is that if Mr Bernanke disappoints, then US stocks may take a turn for the worse.
Interest rates - at near zero since 2008 - have nowhere further to go and the bank has just completed its second round of quantitative easing, another liquidity-boosting move but one whose success is difficult to measure.
But others warned that no action by the Fed could trigger further losses: "If the Fed does nothing, it could prove to be a disappointment at this point," said one analyst at JP Morgan.
Meanwhile, China has appealed for global action to stabilise the markets.
Speaking after a regular meeting by the Chinese cabinet, the country's Premier, Wen Jiabao, alluded to debt problems in the US and Europe and called on "relevant" countries to implement responsible monetary policies and rein in deficits.
According to state radio, he called for the better communication and co-ordination policies as the current uncertainty was "marring a world economic recovery".
However, there was better news on the bond markets where the yield on both Spanish and Italian government bonds fell for the second day.
The European Central Bank (ECB) has begun intervening in the markets to try to keep the cost of borrowing down for the two countries, which are struggling to avoid a Greece-style bail-out by the authorities.
Major crisis The head of the European Central Bank, Jean-Claude Trichet, defended his institution's decision: "It is the worst crisis since World War II and it could have been the worst crisis since World War I if leaders hadn't taken the important decisions," he said in an interview with the French radio station, Europe 1.
 
But Mr Trichet indicated that the main responsibility for fighting the debt crisis lay with eurozone governments and not the central bank.
The eurozone is planning to beef up the powers of the European Financial Stability Facility (EFSF) so that it can start to support government bonds by buying them on the open market.
Individual governments need to ratify the proposals, but delays in doing so have only added to the current uncertainty. Mr Trichet called on eurozone members to "speed up" that process.
Meanwhile Spain's finance minister, Elena Salgado, has again insisted her country does not need a bailout, saying that Spain's total debt was 20 percentage points below the EU average at around 64% of Spanish GDP.
She said Europe would "no doubt" hold a meeting on the financial crisis in early September - although authorities were ready to hold one earlier, if it proved necessary.
On Tuesday, Asian markets suffered further steep falls, although they had recovered around half of their overnight losses by the close.
The Nikkei finished down 1.7%, South Korea's Kospi down 3.64%, and Hong Kong's Hang Seng down 2.8%.
Lacking options
Alan Brown, chief investment officer of Schroders, told the BBC that investors could see no way out of the current troubles.
"The underlying story is all of the weak economic data that we've seen across the eurozone and the UK and the US over the past several weeks," he said.
"I think that investors are recognising that the authorities have very few policy levers left. They have exhausted fiscal options, interest rates in most places are at rock bottom. That is why markets are very nervous."
But Mr Brown said the ECB's moves to support Spain and Italy were "potentially very helpful".
"If they are able to keep a lid on yields in Italy and Spain then they will succeed in stopping the markets creating their own reality whereby they drive yields on Italian and Spanish debt to levels which would cause solvency problems in those countries."
"What's rocking the market is a growth scare," said Kathleen Gaffney of Loomis Sayles.
She said investors were concerned about "how Europe and the US are going to work their way out of a high debt burden" if the global economy slows.
Crude oil prices continued to slide amid concerns that if the economy did slow down, demand would wane in coming months.
Brent crude fell to a six-month low below $100 a barrel before rebounding to $105.
Gold futures hit another new record of $1,782.50 an ounce as investors looked for assets that are considered to be less risky. The Swiss franc also gained.