economy news

pasted from hairulallias@yahoo.com

AFP - Tuesday, October 21
NEW YORK (AFP) - - World stock markets leapt Monday as investors cheered news of stepped-up government action to snuff out the global finance crisis and a better-than-expected US economic report.
Following solid gains in Asia and Europe, the Dow industrials index leapt 4.67 percent to close at 9,265.43 on Wall Street while the Standard & Poor's 500 index advanced 4.77 percent to 985.40. The tech-heavy Nasdaq composite rose 3.43 percent to 1,770.03.
"A mood shift may be underway on Wall Street. Talk of a second stimulus plan and signs the credit crunch is easing combined to create a powerful rally today," said Al Goldman, chief market strategist at Wachovia Securities.
A robust start in New York powered a late-session spurt in Europe, with the London FTSE 100 index surging 5.41 percent to close at 4,282.67.
In Paris the CAC 40 jumped 3.56 percent to end the day at 3,448.51 while in Frankfurt the DAX added 1.12 percent to finish at 4,835.01.
There were gains of 4.68 percent in Brussels, 2.48 percent in Milan, 1.92 percent on the Swiss Market Index and 2.99 percent in Madrid.
Sentiment in New York was boosted when Federal Reserve chief Ben Bernanke threw his support behind another stimulus package to kick-start the economy.
"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told lawmakers.
In another positive sign for markets, the Conference Board reported its composite index of leading economic indicators in the United States, covering the coming six months, unexpectedly edged up 0.3 percent in September, the first increase in five months.
Analysts also attributed the strong showings to a weekend decision by the United States and the European Union to hold a series of summits to strengthen the international financial system, with the first meeting expected next month.
But investors nonetheless remained cautious about the impact of a global credit crunch, which was showing signs of easing as banks, stung by the near meltdown in the US housing market, were starting to lend money to one another again.
"There isn't much rhyme or reason for the upward bias, other than the hopeful sense that the market is near a bottom and that all of the government action will succeed in easing the stresses in the credit market," said Patrick O'Hare, analyst at Briefing.com.
The summits proposed over the weekend have "contributed to creating a climate in which investors can have positive expectations," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.
But he added: "Markets are still surrounded by uncertainty."
Governments have pumped billions of dollars into troubled banks in recent weeks while central banks have injected huge amounts of cash into money markets in an effort to keep credit flowing and prevent a financial system meltdown.
Sweden became the latest government to shore up its financial sector, presenting a plan worth 1.5 trillion kronor (152.2 billion euros, 206.1 billion dollars).
The French government said it would inject 10.5 billion euros (14 billion dollars) into the country's six biggest banks to boost their capital following moves by fellow European countries.
Among the beneficiaries, the biggest bank Credit Agricole will get three billion euros, BNP Paribas will get 2.55 billion and Societe Generale 1.7 billion.
US Treasury Secretary Henry Paulson also gave more details of the US rescue plan, saying banks had until November 14 to apply for some of the 250 billion dollars set aside for capital injections by the government.
Paulson said "a broad group of banks of all sizes" had shown interest in a capital injection.
With the focus shifting from banks to the non-finance economy, there are growing fears of recessions in the United States, Europe and Japan, while China reported Monday that its economic growth slowed to 9.0 percent in the third quarter of 2008.
The International Labour Organisation meanwhile warned that the financial crisis could lead to record global unemployment with 20 million more people out of work by the end of 2009.
In Latin America, Brazil's Ibovespa soared 8.36 percent and Chile gained 4.65 percent.
In Asia, Tokyo closed up 3.59 percent, Hong Kong surged 5.3 percent, Seoul gained 2.3 percent, while Shanghai won 2.25 percent.