Shares run out of steam as recession fears resurface

FRANKFURT - A downbeat end to share trading in Wall Street and across Asia, resulted in a weak start to stocks in Europe on Wednesday as recession fears resurfaced.

By (DPA)

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Published: Wed 15 Oct 2008, 3:30 PM

Last updated: Sun 5 Apr 2015, 2:19 PM

After beginning the trading day down 0.7 per cent, Europe's blue-chip Stoxx50 continued the downward momentum falling by 2.1 per cent to 2358 points by mid morning.

Indeed, shares pulled back across national European bourses with stocks falling by 2.10 per cent in Frankfurt and by 1.84 per cent in Paris.

Europe's premiere stock market in London had lost more than 2.0 per cent in mid-morning trading as an element of reality took hold among investors about the prospects of a global economic slump hitting corporate earnings.

While Tokyo managed to close 1.09 per cent, other Asian share markets ended the trading day in negative territory with Hong Kong sinking by more than 5.0 per cent. New York's Dow Jones index ended Tuesday down by 0.82 per cent after giving up earlier gains.

Wednesday's weak share trading snapped two days of big gains in shares after investors reacted positively to the coordinated crisis management plans launched by governments around the world and central bank moves to pump liquidity into markets.

Signs have emerged of a thawing in frozen global credit markets, which began to tighten 15 months ago following the US subprime mortgage market crisis. This has been characterized by banks refusing to lend each other.

London's key three-month libor rate narrowed to 4.64 per cent Wednesday from 4.75 per cent Monday.

However, analysts cautioned that it could take months before credit markets are successfully freed up and lending starts to flow more easily.

In the meantime, as a sign of the renewed recession fears, oil prices dipped below 78 dollars Wednesday after days of volatile trading.

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