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European shares recover as ECB acts again

Frankfurt, Paris, Zurich, Milan and Amsterdam were all up, buoyed by positive retail data from the United States and by rises on Far Eastern bourses earlier in the day.

The European Central Bank acted once again to ensure smooth operations on the money market, where rates late last week diverged from the 4.00-per-cent the ECB has set.

Monday’s quick tender saw 47.66 billion euros (65 billion dollars) pumped into the European banking system in a one-day tender at a marginal rate of 4.06 per cent.

The injection followed a similar move by the Bank of Japan earlier in the day.

The London-based Financial Times reported that the ECB would seek a large “currency swap” with the US Federal Reserve to ensure that European banks had sufficient dollars to close short-term positions.

The FT said US banks were currently reluctant to lend dollars to European banks, some of which were seen as vulnerable to losses in the US sub-prime mortgage market.

At mid-afternoon, the FTSE 100 was up 2.7 per cent at 6,200, with mining stocks leading the way. On Friday the index lost 3.7 per cent, the largest fall in four years.

In Frankfurt, the DAX 30 index was up 1.3 per cent at 7,441, while in Paris, the CAC 40 was up 2.1 per cent at 5,560.

Milan and Amsterdam saw rises of 1.6 and 1.8 per cent respectively on their main indices. The Swiss Market Index rose 1.4 per cent. Stockholm’s OMX 30 outperformed the others, with a rise of 2.8 per cent.

Earlier the Nikkei 225 Stock Average gained 0.2 per cent to close at 16,800 and Hong Kong’s Hang Seng rose 0.4 per cent to 21,891.

US July retail sales rose 0.3 per cent, faster than predicted by economists, who had predicted the slack housing market would impact consumer spending.