US stocks rebounded and European shares rallied in a highly volatile trading session yesterday marked by concerns over banks and an announcement of a meeting of French and German leaders on the eurozone crisis.
In London, the FTSE 100 index climbed 3.11 per cent to finish at 5,162.83 points, while in Frankfurt the DAX climbed 3.28 per cent to 5,797.66 points and in Paris the CAC 40 rose 2.89 per cent to 3,089.66 points.
Over on Wall Street, in midday trading, the Dow Jones Industrial Average was up 2.50 per cent to 10,988.12, after losing 520 points on Wednesday.
The broader S&P 500 gained 2.58 percent to 1,149.64, while the tech-heavy Nasdaq surged 2.90 per cent to 2,450.04.
Asian stock markets mostly fell yesterday but closed off their early lows as some traders went bargain-hunting despite Wednesday’s huge falls in Europe and on Wall Street.
Tokyo closed 0.63 per cent lower, Hong Kong fell 0.95 per cent and Shanghai was up 1.27 per cent.
On the forex markets, the euro rose to $1.4245 in late European trade from $1.4178 on Wednesday.
The dollar finished at 76.74 yen, down from 76.90 yen in New York on Wednesday.
Gold prices pulled back to $1,760 per ounce, after hitting a fresh record high of $1,814.95 overnight as investors sought the safe-haven precious metal.
After volatile trading during the day stocks in Europe moved up in the afternoon after French President Nicolas Sarkozy called a eurozone crisis meeting with his German counterpart.
Ms Merkel will travel next Tuesday to Paris for the meeting aimed at producing “joint proposals” by September on how to better manage the euro and avoid future instability, Mr Sarkozy’s office said.
Financial markets have suffered dizzying losses in recent days and weeks amid mounting concern that the eurozone debt crisis and weak US economy could help push the world back into recession.
Markets were also haunted by the downgrade of the US credit rating last week, with investors anxious to anticipate the next top-notch country to lose its triple-A rating.
Elsewhere in Europe, Milan rallied by 4.10 per cent, Madrid by 3.56 per cent, and Lisbon by 1.72 per cent. Brussels rallied by 2.54 per cent, Amsterdam by 1.99 per cent, and Zurich jumped by 5.02 per cent.
IG Markets analyst Soledad Pellon Bannatyne said it was too early to say the market has turned a corner.
“We cannot say the market has turned around. We have seen everything during the day,” she said. (AFP)
“There is no concrete reason” for yesterday’s rally. “We consider it to be a technical rebound,” she added.
It also emerged European banks were increasingly turning to the European Central Bank overnight lending facility instead of borrowing from one another, suggesting suspicions of poor bank liquidity remain. European interbank lending rates were also on the rise.
Italy promised yesterday to meet many of the demands made by European Central Bank for major economic reforms in return for help in shielding the country from the debt crisis.