London stocks rally after Asian rout

LONDON - London shares rose on Monday, pushing to one side a tumble by Asian stocks and more pain on Wall Street caused by a global credit crunch.

By (AFP)

Published: Mon 12 Nov 2007, 5:06 PM

Last updated: Sat 4 Apr 2015, 11:14 PM

In morning trade, London’s FTSE 100 index of leading companies added 0.74 percent to 6,351.70 points.

Frankfurt’s DAX 30 fell 0.21 percent to 7,796.21 points and in Paris the CAC 40 dipped 0.05 percent to 5,521.44.

The European single currency stood at 1.4592 dollars.

‘There has been a stronger performance in London than might have been anticipated after drops on Wall Street Friday and a poor (Monday) in Asia,’ said Henk Potts, a strategist at Barclays Wealth.

Potts added: ‘The UK banking sector is strong this morning after being dramatically oversold recently, with the long-term outlook looking more positive than current headlines suggest.’

Wall Street finished last week with another big fall after major banks warned of further losses on their debt portfolios, raising investor concerns that the credit market slump shows no sign of abating, dealers said.

On Monday, Asian stocks were also rocked by another large sell-off, with Tokyo hitting a 15-month low, battered by growing fears over the fallout from the US subprime loan crisis, which has dampened between banks.

Bourses in Asia were also hit by the poor-performing dollar and the Chinese central bank’s latest move to try to cool China’s economy.

‘Investors are holding back from reacting to the bargain levels of shares, as they are increasingly wary of financial and economic problems in the US, which may now linger for longer than previously expected,’ said Hiroichi Nishi, general manger of equities at Nikko Cordial Securities in Tokyo.

Markets are increasingly nervous that the overall US economy could be more severely affected than previously thought, which would in turn hit Asian exports to the world’s largest economy.

‘The subprime problem is not just affecting the US financial sector,’ said Michael Chen, vice president for research at CSC Securities HK Ltd.

‘It is spreading out to the economy, which will affect other countries because the US is a major export destination.’

Investors drew little comfort from a sharp drop in world oil prices after heavyweight producer Saudi Arabia indicated that the OPEC oil cartel would discuss raising output if the need arises, dealers said.

On Monday, Japan’s Nikkei-225 index ended down 2.48 percent after dipping below the key 15,000 points level for the first time since July 2006 as the dollar hit an 18-month low against the yen, weighing heavily on exporter shares.

Shanghai ended down 2.4 percent, off its lows of the day, after the Chinese central bank announced another hike in the bank reserve requirement.

Seoul closed 3.4 percent lower and Sydney dropped 1.4 percent, while Singapore was down 2.4 percent in late trade.

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